Inflation in Poland has risen again, to reach its highest level in over two decades. According to preliminary figures from Statistics Poland (GUS), a state agency, year-on-year inflation reached 5.4% in August. The last time that figure was exceeded was in June 2001, when a rate of 6.2% was recorded.
Poland has had the highest or second highest level of inflation among all European Union member states in every month since March last year, according to Eurostat. July’s figure, of 5%, was the highest since August 2001.
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— GUS (@GUS_STAT) August 31, 2021
Analysts had forecast a figure of 5.2% for August, reports RMF FM. But GUS’s preliminary figure exceeds that. Its final calculation is expected in two weeks, but usually does not differ much from the initial estimate.
Inflation in Poland this year has been driven in large part by fuel prices, which are up by 28% since last August and by 1.8% since July. Energy prices have also risen by 6.1% compared with 2020, and the price of food is up by 3.9%.
Some economists have been critical of the government’s spending plans in face of galloping inflation. It is “like extinguishing a fire with gasoline”, wrote ING Economics, adding that economic growth driven by consumption had already been fuelling inflation before the pandemic.
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— ING Economics Poland (@ING_EconomicsPL) August 31, 2021
Meanwhile, the Polish central bank’s (NBP) monetary council has kept its key interest rate unchanged at 0.1% since May 2020. Hungary and the Czech Republic, which have experienced similar levels of inflation, have increased their rates in the past months.
The NBP has argued that accelerating prices are only a temporary phenomenon and that the all-time-low borrowing costs聽are intended to bolster economic recovery from the pandemic, despite inflation surpassing the NBP鈥檚 target of 2.5% (allowing for a one-percentage-point deviation).
The council is next scheduled to meet on 8 September.
Main image credit: Vladimir Kirakosyan/Wikimedia Commons (under CC BY-SA 3.0)
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聽Gazeta Wyborcza.
