What is the consumer most afraid of? Price increase. In February 2020, price increases frustrated Poles even more than low wages (for BIG InfoMonitor).
Prices actually increased quickly at the beginning of the year. In January by 4.3 percent and in February by 4.7 percent, which meant that inflation it was almost twice as high as the National Bank of Poland wanted (official inflation target is 2.5%). Today inflation is 2.9 percent. and it is still felt by an ordinary Pole. No wonder that we invariably regard it as a big threat and call it “inflation tax.” We associate it with a country that, “printing money”, repays debts incurred for new expenses. It is interesting, however, that in the richest countries the inflation monster has changed into a Yeti. Mainly it is said that they were once seen. In the US, Japan or the euro area, central banks have a problem achieving even a modest 2% inflation target. Prices as if frozen. Globally, in the 1980s they grew by an average of 8%. per year (today they are also growing, but by 1-2% at the most). Even in Poland, inflation stabilized at a low level, especially compared to the 1990s. The yearly increase in prices slowed down to a one-digit pace in 1999 (it was 7.15% at the time), although in 1995 it was still 28 percent and nobody by 2.5 percent he did not dream of inflation target even then.
Now the best: economists are fading inflation worries. They miss her.
Good inflation
How can you miss rising prices? To get it right, you need to understand the fundamental issue of economics of the game of supply and demand that shapes market prices. When demand increases and supply stays the same, prices rise. After all, production is adjusting and the price growth dynamics is falling. When demand falls and supply stays the same, prices fall. After all, production is adjusting and the dynamics of falling prices are decreasing.
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