Inflation reached its highest level in almost a decade last month. In May, prices of consumer goods and services grew 4.8% year-on-year, according to a flash estimate by Statistics Poland (GUS), a government agency. That was up from 4.3% in April and represents the highest figure since November 2011.
Rising prices were driven chiefly by fuel (up 33% year-on-year) as well as energy (up 4.4%). Prices of food and alcoholic beverages increased 1.7% year-on-year in May, compared to 1.2% in April.
Poland has recorded the highest or second highest level of inflation among all European Union member states in every month since March last year, according to Eurostat.
Yesterday’s GUS estimate is preliminary, but the final calculation, which is expected in two weeks, does not usually differ much. Meanwhile, core inflation – a measure that excludes commodities with extremely volatile price movements to show an underlying trend – was 3.8% in May, down slightly from 3.9% in April.
Last month, the Monetary Policy Council of the central bank (NBP) said it expected inflation to exceed 3.5% by the end of the year. The lender, however, said this would only be temporary and that prices were being pushed up by factors independent of monetary policy.
As a result, it has kept its key interest rate unchanged at 0.1% since May 2020. The all-time-low borrowing costs are intended to bolster economic recovery from the pandemic, despite inflation surpassing the NBP’s target of 2.5% (allowing for a one-percentage-point deviation).
Prognozujemy, że do końca roku inflacja będzie przekraczać 3,5%. Ceny paliw będą podwyższać wskaźnik średnio o 1 pkt. Spodziewamy się stopniowego obniżania się inflacji bazowej, równocześnie jej spadki rekompensować będzie przyśpieszający wzrost cen żywności. pic.twitter.com/leUQMvwPEz
— Polski Instytut Ekonomiczny (@PIE_NET_PL) June 1, 2021
Main image credit: PublicDomainPictures.net (under CC0 1.0)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
