At a press conference held on Wednesday, the President of the National Bank of Poland, Adam Glapinski, presented the latest forecasts regarding the level of inflation in Poland. This figure is expected to decrease again in the coming months. The decline in the first quarter of this year may be faster than expected in the November NBP forecast. As a result, inflation may drop below 3% in the first half of the year. However, as Glapinski warned, the second half of 2024 may bring negative changes in this matter.
Inflation in 2024
As the President of the National Bank of Poland said, inflation may increase significantly in the second half of the year. It will depend on several factors.
– Current forecasts indicate that inflation may increase in the second half of the year after a significant decrease in the following months. Inflation falls almost to the inflation target, or even the target (…) and then may rise sharply to 6, even 8 (percent – editor's note). This largely depends on the government's decision regarding changes in electricity prices and food VAT, said Adam Glapinski.
The head of the central bank said that the level of inflation will depend on the VAT rate on basic food. We remind you that the zero tax rate on these products will be effective until the end of March. Glapinski emphasized that it is not yet known what decision the Ministry of Finance will make regarding this issue. He indicated that if the rate returns to the previous level, i.e. 5%. Then consumer CPI inflation will increase by 0.9 percentage points.
The second factor affecting inflation will be energy prices. According to the current legal status, gas, electricity and heating prices remain frozen until the end of June this year. We do not know what decision the government will take on this issue.
– It is difficult to imagine that the freeze will end, because then the inflation rate could increase by almost 4 percentage points. (…) Of course, this is very, very unlikely. However, it is likely that a partial freeze will occur, which means that these prices will partially increase,” said Glapinski.
The last factor is the increase in budget expenditures in the area of salaries (increases in teachers and the public sector).
– As a result of the increase in budget expenditures, in particular on wages, the demand pressure in the economy may be greater than previously expected. It can be estimated that the above-mentioned additional budget expenditures will contribute to the increase in inflation from the November forecast by 0.1 percentage point compared to our previous assumptions. This year, but even more, because 0.4 percentage points in 2025 – explained Glapinski.
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