Inflation in Poland is falling faster than was forecast and will continue to accelerate because of seasonal deflation caused by a fall in food prices, according to Ernest Pytlarczyk, chief economist at Bank Pekao.
Speaking to the Polish Press Agency (PAP), Pytlarczyk explained that just as increases in inflation tend to be underestimated in forecasts, the same applies to forecasts for drops in the inflation rate.
Inflation in the four largest EU countries, Germany, France, Italy, and Spain, has also fallen by more than was forecast. In Poland, the last two inflation figures for April (14.7 percent) and May (13 percent) were markedly below those that economists had estimated.
Pytlarczyk claimed that Poland may be entering a period of disinflation. He bases this on the fact that prices between the months of April and May did not rise. That is the first sign of disinflation, he argued, and also said that in the past there was seasonal disinflation in the spring and in the summer.
His analysis of industrial wholesale prices also indicates that inflation is slowing down — wholesale prices dropped by 0.7 percent between April and March and saw an increase of less than 7 percent over April 2022. He expected to see disinflation in industrial wholesale prices over the summer. The reason producers are dropping their prices is related to lower prices for raw materials and the strengthening of the Polish złoty against the euro.
Pytlarczyk recalled that industry is much closer to the situation in China where there is already disinflation. When producers see prices stalling or falling in a major country like China, that affects their behavior. Another important factor is the lower price of oil and gas prices, which have returned to their autumn 2021 levels.
The economist concluded that the inflation forecasts will soon be reduced to reflect the new reality and predicted that Poland would see single-digit inflation in September.