The rise in inflation helps the budget, so some of us are happy – assessed financial analyst Piotr Kuczyński in the TVN24 program “Fakty po Faktach”. The expert also referred to the government’s argument that the increase in wages reduces the negative effects of inflation for Poles. – Most Poles have not seen such increases, let’s not tell fairy tales – he said. In turn, the chief economist of Employers of the Republic of Poland, former Finance Minister Paweł Wojciechowski, emphasized that the Polish Deal program may contribute to further price increases.
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October inflation was 6.8 percent year-on-year – the Central Statistical Office (GUS) reported on Friday. Earlier predictions from analysts pointed to a 6.4 percent year-on-year increase in prices. A month earlier, September saw an increase of 5.9 percent year on year. Economists agree that such high inflation is an argument for further interest rate hikes.
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Inflation in Poland – October 2021. “It has been surprising recently”
Financial analyst Piotr Kuczyński referred to the fact that the latest GUS inflation data exceeded economists’ expectations.
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– Inflation has been surprising recently, so it is no wonder that it has surprised this time as well. 6.8 percent this is a lot, some say it will be above 7%. this year, some are even predicting double-digit inflation, which I personally doubt. One can only predict here – we see what is happening on the world markets, we see what is happening on the commodity market, what is happening with the zloty. It doesn’t all help. The rise in inflation helps the budget, so some of us are happy, said Piotr Kuczyński.
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Inflation in PolandPAP
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In turn, prof. Paweł Wojciechowski drew attention to the influence of the Polish Deal on price increases.
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– The Polish Order is a demand order. This is a further stimulation of demand (consumer spending – ed.), And consumer demand influences inflation. We are dealing with a policy that stimulates demand, i.e. government spending and the Polish Deal. On the other hand, we have suspended and frozen funds from the National Reconstruction Plan, which were to be this supply order. It is not known when they will be. There will be no reforms, there will be no investments – said Paweł Wojciechowski.
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– Monetary policy has also been supporting the government for years, especially in the recent period. Instead of raising interest rates, the NBP delayed many months, downplaying the matter. Today it is basically too late for any rate hikes, and we will have to wait for the effects of suppressing inflation for at least a year. We are dealing with fiscal and monetary stimulus at the same time, which mean that together with the Polish Government there will be a continuation of the high prices – he said.
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According to the expert, the monetary policy of the central bank supported the government’s actions.
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– The National Bank of Poland favored the government, because due to the high inflation, the budget revenues are higher – about PLN 10 billion a year with such high inflation, the budget benefits from it, this is the so-called inflation tax – he assessed.
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Inflation and interest rates. Kuczyński: hikes should not be very high
However, Piotr Kuczyński pointed out that the actions of central banks in the face of rising inflation do not differ significantly from each other.
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– The policy of central banks around the world is the same – Jerome Powell (head of the Fed – ed.), Christine Lagarde (head of the ECB), President (Adam) Glapiński – all say that inflation next year will be lower and they do the same. Today “Bild”, the German tabloid, called Ms Lagarde “madame inflation”. We just need to start calling Mr. Glapiński that. I am far from criticizing these central banks, I know that most economists say that interest rates should rise faster in Poland – said Piotr Kuczyński.
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However, analysts pointed out that an excessively sharp increase in interest rates may harm the economy.
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– What would have to be the increase in interest rates for it to really have any effect in, say, six months? Well, he would have to be very tall, and if he was very tall, what would happen? Well, it would suppress the economy, (so) it cannot be very high. Why should the Monetary Policy Council slowly raise rates? To show that it wants to fight inflation in the future, so as not to stimulate the inflationary expectations of the society. The longer inflation remains high, the greater will be expectations. Economists say that then the so-called second-round effect is awakened, we rush to employers for pay raises, the employer gives us pay raises, we run to the store, we buy and the spiral effect spins – he explained.
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The expert also referred to the government’s argument that the increase in wages reduces the negative effects of inflation for Poles.
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– Increase in wages by 8.7% this is high growth, but it is only in the enterprise sector, only where more than 9 people are employed. Most Poles have not seen such increases. Therefore, let’s not tell fairy tales – he said.
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photo-source">Main photo source: PAP / Wojciech Olkuśnik
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