Poland’s baseline inflation — excluding food and energy prices — was in line with that of the eurozone and, especially, that of the region, said the governor of Poland’s central bank (NBP), Adam Glapiński, during a press conference on Thursday.
The central bank head indicated that the inflation rate is higher in Central and Eastern Europe (CEE) because people in this region spend more of their income on food and energy, which is not as much the case in wealthier Western societies.
Glapiński argued that Polish inflation is pretty much in line with the average for the CEE region, which is around 12 percent. The high rate of base inflation has occurred because of the shocks that have had to be absorbed by businesses with regard to factoring rising energy costs into prices and the high cost of labor due to the healthy situation in the labor market.
According to Statistic Poland (GUS), the retail price index in April fell to 14.7 percent, while the baseline inflation figure actually rose to 12.3 percent in March.
The head of the NBP argued that companies for some time have been increasing both prices and their profit margins, especially in countries with low unemployment such as Poland and Czechia. However, he said that this is changing as a result of a fall in demand.
After its latest meeting, the Polish Monetary Policy Council (RPP) kept interest rates at the same level. This is the eighth month in a row of no change, with the rate currently at 6.75 percent. In its statement, the council said the rise in the cost of raw materials and supply chain problems had affected the rate of inflation but that these pressures were now easing, which should confirm the downward trend in the rate of inflation.
Falling demand is predicted to add to that downward trend. As a result, the council stated that earlier tightening of monetary policy has led to a decrease in inflationary pressures and means that Poland is now moving in the right direction with regard to meeting the central bank’s goal of getting the inflation rate back down to 2.5 percent.