Credit Agricole Bank Polska assessed that the lower-than-expected CPI consumer inflation reading in March lowers the indicator’s forecasts for the rest of the year to 3.3%. y/y this year (compared to 3.5% before the revision) and up to 3.6%. in 2025 (compared to 4% before the revision). According to the bank’s economists, the price dynamics of food and non-alcoholic beverages will decrease to 3.1% in 2024. (3.7% before the revision) compared to 15.4%. in 2023, and in 2025 it will increase to 3.7%. (3.5%), which will result from the incomplete transfer of the VAT increase on food to 5%. on inflation as a result of “price wars” of discount stores, falling prices of agricultural raw materials, and next year will be additionally influenced by lower energy prices on the market than currently.
Credit Agricole lowered its forecast of average annual inflation in 2025.
– We assume that stores that have kept prices at the level before the VAT increase will start to include it in their prices in May. Therefore, we believe that in the April-May period the tax will be fully transferred to retail prices. This is the impact profile of restoring 5%. we imposed VAT rates on food in our scenario assuming a further reduction in the dynamics of food prices due to the decline in global prices of agricultural raw materials and the recently visible increased pressure of retail chains on suppliers related to the intensifying price competition between stores. In this situation, we forecast that the price dynamics of food and non-alcoholic beverages will decrease to 3.1% in 2024. (3.7% before the revision) compared to 15.4%. in 2023, and in 2025 it will increase to 3.7%. (3.5%). Taking into account the current quotations of futures contracts for energy prices next year, we believe that the scale of tariff increases for gas, electricity and district heating prices at the beginning of 2025 will be lower than previously assumed. To sum up, we forecast that inflation will amount to 3.3%. y/y in 2024 (3.5% before the revision), and in 2025 it will be equal to 3.6%. (previously 4.0 percent) – we read in the MakroMap “20 years of Poland in the EU – when will Poland become more prosperous in Europe?”
To maintain prices in April at the levels before the restoration of 5%. VAT rates were chosen by stores responsible for approximately 40 percent. food sales, other stores accounting for 60 percent market passed the entire increase on to consumers, the bank said.
According to preliminary data from the Central Statistical Office (GUS), consumer inflation amounted to 1.9%. on an annual basis in March 2024. Compared to the previous month, the prices of consumer goods and services increased by 0.2%.
Prices of food and non-alcoholic beverages increased by 0.2%. y/y, energy prices: decrease by 2.6%; fuel prices for private means of transport – drop by 4.5%.
On a monthly basis, the prices of food and non-alcoholic beverages decreased by 0.2 percent, the prices of energy carriers decreased by 0.4 percent; fuel prices for private means of transport – increase by 0.1%.
Member of the Monetary Policy Council (MPC), Iwona Duda, in an interview with ISBnews, estimated that consumer CPI inflation may amount to approximately 2%. y/y in March compared to 2.8 percent y/y in February.
The market consensus was: +2.3%. y/y +0.4 percent m/m.
