In April, the prices of goods and consumption services fell by 1.1 percent year to year – show latest GUS figures. – Deflation in Poland is practically over. Month to month the prices are rising for the second month running and the increase is gathering pace. We will be dealing with year to year deflation for a couple of months, but base effects should contribute to its relatively quick elimination – comments Łukasz Kozłowski, expert of Employers of Poland.
It seems certain that in the coming periods the consumer price dynamics index will move towards zero. Not only is the month to month price growth faster and faster, the statistical base will decrease in the coming months.
Year to year deflation is still propelled mostly by dropping fuel and food prices, as the base inflation index remains positive after the exclusion of these components. However, the impact of these two components is dwindling, as shown by the fact that month to month food and drink prices increased by as much as 0.6 percent.
The economic upturn in Poland, which has already resulted in a significant decrease in unemployment, should have more and more impact on price growth, which as a consequence increases the likelihood of a higher wage pressure. The strengthening of consumption demand also contributes to an increase in price growth dynamics. Such a development would certainly convince the Monetary Policy Council (RPP) that further interest rate cuts are not necessary.
Łukasz Kozłowski, economic expert of Employers of Poland