As a consequence of Russia’s invasion of Ukraine and the drought in Europe, food prices may be as much as 20 percent higher year on year after the summer, further increasing inflation, the Polish Economic Institute (PIE) said on Friday.
Poland’s Central Statistical Office (GUS) announced on Friday that the prices of goods and services (CPI inflation) had increased by 12.4 percent year on year in April and by 2.0 percent month on month.
Commenting on the GUS data, PIE said the high inflation rate was primarily due to fuel and energy bills, with the prices of both being more than 27 percent up from a year ago. Food prices are also growing at a double-digit rate, with food products being 12.7 percent higher in April than a year earlier.
PIE analysts pointed out that rapid price growth affects a wide range of goods and services as base-rate inflation stood at 7.6 percent.
“In the coming months, the growth in food prices will further accelerate inflation,” PIE wrote in its commentary. “Russian aggression has resulted in an interruption of the grain trade from Ukraine, which has raised the prices of wheat, oils and meat. In addition, Europe is again struggling with the problem of drought, which will result in a growth in the prices of fruit and vegetables. In the current circumstances it cannot be ruled out that after the (summer) holidays, food prices will be higher by almost 20 percent compared to last year.”
In PIE’s opinion, the high growth of food prices and increased energy and fuel costs will remain for the rest of the year.
“We estimate that inflation for the whole of 2022 will stand at an average of 11.6 percent,” PIE said. “In 2023, a moderate decline awaits us – the indicator will reach 8 percent. Europe will still be struggling with the results of war in Ukraine.”