Economists from the Polish Economic Institute (PIE) forecast that inflation will continue to rise in the coming months, with a notable acceleration expected post-July. According to the Central Statistical Office (GUS), consumer goods and services prices in April increased by 2.4% year-over-year, and 1.1% compared to the previous month. This follows a previous flash estimate by GUS, which also indicated a 2.4% year-over-year inflation rate for April.
PIE economists highlighted that April’s inflation rate rose to 2.4% from 2.0% in March, primarily due to higher food prices, which saw a 2.1% month-over-month increase. This was attributed to the return to higher VAT rates. Additionally, fuel prices rose by 2.1% month-over-month, driven by increasing global oil prices.
The economists project that the impact of higher VAT on food prices will remain evident through May and June as retailers gradually update their pricing to reflect the 5% VAT rate. They forecast that by the end of the year, inflation will reach approximately 5.5%.
April is likely to have been the last month with a significant drop in core inflation, which is estimated to have fallen from 4.6% to 4.0%. The economists expect it to stabilize at an elevated level in the subsequent months. They also noted ongoing inflationary pressure from sustained demand and rising labor costs.
In the second half of the year, inflation will be further driven by the partial thawing of energy prices. PIE estimates that energy prices will increase by about 15% in July alone, boosting inflation by over 2 percentage points. To mitigate the impact of rising prices, an energy voucher will be issued, varying based on household size and income.
The Polish Economic Institute, a public economic think tank, prepares reports, analyses, and recommendations on key areas of Poland’s economy and social life.