Photo by Frank Hammerschmidt (dpa / ZB / Scanpix).
Annual inflation in Poland accelerated to 2.4% in April, after the annual rate of 2% was fixed in March. Inflation in Poland last month was the lowest in the last five years, according to preliminary data published by the National Statistical Council GUS on Tuesday.
The annual growth of the consumer price index was increased to 1.9% by the increase in the price of fast food products and non-alcoholic beverages, and if they are taxed from April, the value added tax rate will increase by 5% (until then it was zero). In April, 1% pre-monthly inflation was recorded.
Most economists had predicted that inflation would be 2.5%, although expert expectations ranged from 2.3% to 3.1%. There is great uncertainty as to how much of the new fee merchants will pass on to consumers.
The Polish government’s decision to impose VAT on food from April and plans to gradually remove the price caps on electricity are part of efforts to roll back measures aimed at controlling inflation following Russia’s war in Ukraine and the coronavirus pandemic.
The data published on Tuesday will probably not allow the central bank to reduce interest rates in the near future.
Apprehensions that price growth may resume as a result of the replacement tax, led the head of the Polish central bank, Adam Glapinsk, to repeatedly suppress expectations that the central bank will reduce interest rates by the end of the year. Since October, the base rate has remained unchanged at 5.75%.
However, the biggest year-on-year decline in industrial production recorded in March will also fuel concerns that the economic recovery is stalling. On Tuesday, Oil Finance Minister Andrzej Domanskis told TVN24 news channel that lower wage rates will help the oil budget and the economy.
It is likely that monthly price growth will accelerate to around 3%. Basic inflation is still very high, which is the main mistake when making decisions about changing the tax rates, Polish economist Ludwikas Koteckis told Biznes24 television after the publication of the consumer price index.
Base inflation, which excludes energy and some food prices, was 4.6% in March.
According to the data of ING Bank Slaski, a bank operating in Poland, the rate will most likely remain around 4% in the coming months.
The risk of higher inflation has not disappeared, and the central bank will most likely maintain its current caution, according to economists at ING Bank, in their announcement, where Bloomberg is quoted.
More accurate and detailed April inflation data will be published by the Polish National Statistical Office in mid-May.
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