Higher social benefits won't affect inflation trend says Polish PM

Piotr Nowak/PAP

Mateusz Morawiecki, the Polish prime minister, has argued that increasing a monthly child benefit programme by PLN 300 (EUR 66.6) will have no negative affect on inflation.

Inflation in Poland stood at 14.7 percent in April, according to GUS Central Statistical Office, down from a 26-year-high of 18.4 percent, but still one of the highest rates in the EU.

The leader of the ruling party Law and Justice (PiS) Jaroslaw Kaczynski announced during a party convention over the weekend the 500-Plus programme will increase to PLN 800 (EUR 176) from January 2024, if his party wins the upcoming autumn elections.

On Monday, Morawiecki said that the indexation of child benefits to PLN 800 would cost the state budget around PLN 24 billion (EUR 5.3 billion) or 0.7-0.8 percent of GDP.

He added that this additional "fiscal injection" should not change the current inflation trends.

Morawiecki explained that PiS had proposed to introduce 800-plus not earlier than January, "because we are convinced that then inflation will be in a strong downward path."

"Today, reading the analyses of international institutions and our own, we know that inflation will be falling, and at the end of this year it may be in a very rapid falling trend."

Not all the money given to families, he suggested, will be spent, with some of it being saved and thus not contribute to inflationary pressure.

"Economists know perfectly well and can calculate that there will be no dangerous fiscal impulse that will reverse this inflationary trend," he said.

Asked about the sources of financing the indexation of the 500-plus programme, Morawiecki said: "We continue to improve, to tighten the functioning of the tax system, the public finance system."

"Second - from stronger economic growth next year... which in turn translates into to a better budget, higher revenues," he added. "We have recalculated it properly, I have no concerns about it."