“We have revised our inflation forecast for 2024-2025. The preliminary inflation reading for March (1.9% y/y) turned out to be lower than our expectations, which, through a lower starting point, contributes to a lower inflation path throughout 2024.” – it was written.
“In addition, due to the declarations of the largest retail chains (including Biedronka and Lidl) regarding maintaining the prices of many food products at the levels in March, i.e. before the restoration of the 5% VAT rate on food, we have revised down our food price path in 2024” – they added.
Analysts write that 5% will be required to keep prices in April at the levels before the restoration. VAT rates were chosen by stores responsible for approximately 40 percent. food sales, while other stores responsible for 60 percent the market passed the entire increase on to consumers.
They believe 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. We imposed such a profile of the impact of the restoration of the 5% VAT rate 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,” analysts said.
Credit Agricole forecasts 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%.
“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 percent y/y in 2024 (3.5 percent before the revision), and in 2025 it will be equal to 3.6 percent (previously 4.0 percent),” it was written. (PAP Business)
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