Food prices increase inflation in Poland
Inflation in Poland increased in March 2020. The latest Central Statistical Office (CSO) report shows that the prices of consumer goods and services compared to March 2019 went up by as much as 4.6 %, and Compared to February 2020, prices of goods and services increased by 0.2%. The 4.6% inflation rate is the second largest increase since November 2011 and also an indicator that already covers the first effects of the coronavirus crisis.
What had the biggest impact on inflation in March 2020?
"Compared to the same month last year, higher food prices (by 8.6 percent) and prices of housing (by 5.9 percent) increased this indicator by 1.97 pp and 1.42 pp respectively. Lower prices in the scope of transport (by 1.4%) as well as clothing and footwear (by 1.7%) reduced the index by 0.14 pp and 0.09 pp, respectively, " informs the Central Statistical Office.
When it comes to food, the main responsibility for price increases is meat. Pork increased by 27.1% year-to-year, and by 2.1% month-to-month, whereas poultry increased by 8.3%, and by 5.2 percent respectively.
In the first case - the price of pork - is still affected by African swine fever virus in China. Although the disease is limited, China's piglet prices are still breaking records. Chinese breeders are trying to reproduce herds destroyed by ASF.
In March, also some other food prices increased: fruit - by 1.7 percent compared to February (19.3% year-to-year), while vegetables were cheaper by 0.6% month-to-month (but higher by 7.9% year-to-year).
Inflation will soon fall down due to the coronavirus
However, coronavirus is already changing inflation scenarios for the coming months. "Future Inflation Index (WPI), forecasting several months in advance the direction of changes in prices of consumer goods and services, in April 2020 decreased by 1.2 points" - wrote the Investment and Economic Cycles Office (BIEC) in a statement.
As pointed out by BIEC, the indicator is currently under the influence of two forces operating in opposite directions.
"The pandemic caused a sharp contraction of demand, which resulted in a strong overestimation of raw materials in global markets and a fall in prices of many goods" - explain analysts. As added, the commodity price index published by IMF has fallen by over 21 percent over the past two months (from 119 points in January this year to 93 points in March this year).
It was emphasized that among Polish entrepreneurs there was a definite retreat from the implementation of previous intentions to raise prices for offered products.
Also the Ministry of Development foresees the April inflation rate lower than in March. According to the Ministry of Development, on a monthly basis, in April 2020 the price index will increase by approx. 0.6%, as compared to April 2019, and the level of inflation will be close to 4.0 percent.
The Ministry of Development expects price pressure to gradually fade out in the coming months. Lower raw material prices will contribute to falling prices, which will affect transport prices by nearly 10%. On the other hand, possible restrictions on supply chains may influence price increases.
Source: CSO, Ministry of Development, businessinsider.com.pl