Poland facing double-digit inflation as prices of consumer goods and services hits 12.3 percent

Poland is facing double-digit inflation, the president of the Polish Development Fund has said.

The warning comes as prices of consumer goods and services (Consumer Price Index, CPI) increased by 12.3 percent year on year and by 2.0 percent month on month in April 2022, the Central Statistical Office (GUS) reported in a flash estimate on Friday.

Economists polled by PAP Business estimated that April's CPI would reach 11.5 percent year on year and by 1.3 percent month on month.

In March, the prices of consumer goods and services increased by 11 percent year on year and by 3.3 percent month on month.

Commenting on Friday’s GUS inflation data, Pawel Borys, president of the Polish Development Fund,  said the double-digit inflation could happen in the next few months "with a possible peak in Q3."

Posting on Twitter, he said: "Unfortunately, high prices of food, fuels, gas, metals and shortages of raw materials, as well as strong wage dynamics will cause double-digit inflation in the next few months with a possible peak in the third quarter.

"Wages are chasing inflation and inflation is chasing wages."

On Friday, the Central Statistical Office (GUS) reported that prices of consumer goods and services in April 2022 rose 12.3 percent year on year and 2.0 percent month on month.

A peak in inflation will be seen in August at around 13 percent, the Polish Economic Institute (PIE), government think-tank, said. According to PIE analysts, inflation will come down in the longer term due to a weakening economic situation in the eurozone.

Urszula Krynska, an analyst at PKO BP, commented that "The main surprise is food prices, which increased 4.2 percent month on month." She said that "inflation was additionally boosted by energy and fuel hikes, which are growing strongly year on year but slowed on a monthly basis."

"We have seen another big surprise with inflation. This is mainly due to food and energy prices, but it seems that core inflation has also increased - our estimate at the moment is 7.3 percent," Piotr Bielinski, an analyst at Santander Bank, said.

"This is undoubtedly a strong argument for a rise in interest rates by 100 bps at the next MPC meeting," he added.