High inflation still a problem says think tank

The high level of the consumer price index (CPI) and sticky core inflation still pose problems for the Polish economy, a government-affiliated think tank has said.

Prices of consumer goods and services (Consumer Price Index, CPI) increased by 16.2 percent year on year and by 1.1 percent month on month in March 2023, the Central Statistical Office (GUS) reported in a flash estimate on Friday. This compares to respective figures of 15.8 percent and 0.9 percent expected by economists.

"We expect next month's to bring gradual deceleration of the gauge to single-digit levels at the end of the year," the Polish Economic Institute (PIE) said on a comment on Friday.

"The sticky core inflation is the main problem," PIE added.

Core inflation does not include the food and energy prices, which are the most volatile.

"We estimate that it went up to 12.2 percent from 12.0 percent (in March - PAP)," PIE said. "And it will continue to remain high in the next months. We expect core inflation to go down to single-digit levels only at the end of the year."

The Institute believes March marked the beginning of a disinflation trend: "The peak is already behind us and in the next months we'll see a slow decline of inflation."

However, prospects for the CPI returning to acceptable levels are remote, PIE said. "We expect prices to grow by an average of 12 percent in 2023 while core inflation will remain in the double-digit area."