As indicated by most recent GUS figures, prices of consumer goods and services in February have dropped by 0.8 percent compared to the analogous period last year. – Contrary to expectations, deflation is not only not dying out fairly quickly, it is actually deeper in an annual perspective than it was in the last quarter of 2015. However, one should note that due to the routine changes in the measurement system, the figures on the consumer price index in January have been revised and dropped to -0.9 percent – comments Łukasz Kozłowski, expert of Employers of Poland.
This time, preliminary estimations of the value of the consumer price index in February were not available. Therefore, the prognoses are less reliable than they usually are. In the future, the situation should be back to normal.
Yet again, the prognoses forecasting the end of deflation prove to be inaccurate. Recent growth in crude oil prices could have an impact on an increase of the price index in Poland. However, for this to have a tangible impact in this regard, tendencies from the last few weeks would have to be maintained for a longer period of time.
A small increase in food prices, both compared to last February and to last month, will not be enough to put an end to deflation. Most other goods are getting cheaper – eg. shoe and clothing prices dropped by 4.5 percent year to year. A continued price decrease may convince the Monetary Policy Council, now with changed personnel, to lower interest rates, particularly considering the new prognosis for inflation, which has been significantly lowered. On the other hand, the Council may also be of the opinion that prices are falling as a result of global tendencies over which the Polish monetary authorities have no control, while deflation has not seriously damaged Polish economy and even helped it in some respects, such as cheaper energy sources.
Łukasz Kozłowski, economic expert of Employers of Poland