Putinflacja is a concept probably coined by the economists of the Pekao bank, which already in April of this year. calculated that over 1/3 of the then inflation in Poland (it was equal to brand name 11 percent) corresponds to the gas blackmail of Vladimir somestarted in autumn 2021.
Long before the West started imposing sanctions on Putin’s Russia, Putin’s Russia was already at economic war with the West. In mid-2021 it closed the gas taps, increasing cost pressure in Europe
– he wrote in April of this year. Pekao analysts.
In recent months, the term “putinflation” has been enthusiastically used by politicians, including Prime Minister Mateusz Morawiecki to describe the impact of energy blackmail Russia and its aggression against Ukraine to raise prices.
However, not everyone likes this phrase. In the last analysis, together with prof. Jan Hagemejer, the thesis on “putinflation” is undermined by a member of the Monetary Policy Council, prof. Joanna Tyrowicz.
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Tyrowicz: In Poland, the thesis about so-called putinflation does not fit the data
In Poland, the thesis on the so-called putinflation does not correspond to the data: the impulse coming from the prices of energy vectors, having dutifully passed through all sectors of the economy, generates much lower inflation than that observed
As pointed out by one member RPP, “the increases in inflation started before the war and were not driven by energy carriers”. He warns that “in 2023 the impulse to increase prices in Poland could intensify”.
There are factors that are being overlooked in the inflation debate that could have a serious impact on the price-setting process next year. Application? Since inflation has not only increased as a result of the increase in energy carrier prices flowing into the economy, it will not decrease “by itself” to the inflation target when these prices fall
– writes the prof. Tyrowicz. He adds that the energy crisis, not only in our country, but also in other European countries, is a fact and occurred in some countries long before Russia’s aggression against Ukraine. However, the PMP member warns that the crisis “will last even as long as the energy transformation lasts (ie the duration of Russia’s aggression against Ukraine may not be decisive).”
We in no way diminish the horrors of the war in Ukraine started and waged every day by Putin. Instead we are trying to use the available data to understand something more about the price setting processes in Poland. Since we did not have individual data on prices, we analyzed the diffusion process of energy carrier prices in all sectors of the economy. Thanks to this we understood something more, although obviously not everything. Without a deeper understanding of the processes of price setting, the discussion of inflation (and interest rates) is like shave/shave, go up/down, up/down. It’s a waste of time for such a nudge, as it can be used for analysis and empirical learning
– writes the prof. Tyrowicz.
prof. Tyrowicz and Hagemejer analyzed price increases in different industry sectors that provide energy carriers for the whole economy. These are: mining and quarrying, production and processing of coke and refined products crude oil and generation and supply of electricity, gas and heating. The analysis shows that price increases in these sectors are not responsible for the entire inflationary impulse in Poland. If – in theory – prices in the economy immediately reflected price changes in the sectors being analysed, then the maximum (and under certain assumptions) could currently reach around 11.5%. (according to the flash estimate of the Central Bureau of Statistics, it was 17.4 per cent in November).
Trivially, if there was “putinflation” in Poland, we would see in the GUS publications that all inflation is an increase in energy prices
Economists point out that in some other EU countries the impact of the energy shock on inflation is greater than in Poland. For example, the average increase in electricity generation prices in Germany has been twice as high as in Poland, and inflation is much lower (as measured by the CPI, it was 10 percent year-on-year in November). . At the same time, the energy shock was not only related to the war in Ukraine, but also to energy transformation (switching to other energy carriers).
The analysis also indicated that “the increase in energy carrier prices in many countries was much higher than in Poland”.
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