Inflation may fall to single-digit level after Q3 says state fund head

Inflation in Poland will hopefully drop to a single-digit level at the turn of the third and fourth quarters of 2023, the head of the state-run Polish Development Fund (PFR) has said.

According to Poland’s Central Statistical Office (GUS), consumer prices in March rose 16.2 percent year on year, and 1.1 percent month on month. February inflation stood at 18.4 percent year on year.

Talking to the private broadcaster, Pawel Borys also said that the inflation „should be below 10 percent, closer to 8 percent” at the end of 2023 and that „in 2024 it will fall to about 5 percent.”

Asked why inflation in Poland was higher than in Western European countries, he explained that in Poland and other Central and Eastern European countries, energy prices have a greater share in generating national income.

„We are also a bit poorer, so food prices weigh more on our budgets than in the richer countries of the Western EU,” Borys argued.

He also said that Poland’s unemployment rate was significantly lower (5.4 percent in March 2023 - PAP), than in other European countries like Italy or Spain, where it was around 8-10 percent and therefore „there was no such wage pressure that entrepreneurs translate into the prices of products and services.”

Borys added that the current challenge is not public debt, but the budget deficit, which last year increased to 3.5 percent of GDP.

He indicated that this increase resulted from the introduction of social programmes by the government, whose cost was around PLN 70 billion-80 billion (EUR 15.2 billion-17.4 billion) and from the hike in defence spending. (PAP)

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