Global and National Inflation Overview

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Following two unanticipated surprises – the Covid-19 pandemic and the Russian armed aggression against Ukraine – global inflation has increased since the beginning of 2021.

Thus, the rise in inflation in most economies in the recent period has global sources, which means that disinflation is not possible without global measures. In other words, reducing price growth requires action to be taken by major central banks. These measures are already being taken: the Fed has been raising interest rates significantly since March, and the ECB made the first interest rate hike in 11 years in July.

Polish economy coped with the pandemic well, in Q1 this year GDP exceeded the pre-pandemic level by more than 8%, while some economies, including Germany, did not reach the pre-pandemic level. Such a dynamic recovery of economic activity is an absolute success, although it also creates fertile ground for a stronger increase in prices as a result of global pro-inflationary shocks.

According to the prior estimate of the Central Statistical Office, the dynamics of consumer prices in Poland in July 2022 amounted to 15.5%, so it did not change compared to June this year, which may indicate that the inflation growth has slowed down.

Although a temporary decline in GDP on a quarterly basis cannot be ruled out, Poland is certainly not in danger of an economic downturn. It is expected that after several quarters of weaker activity in the second half of 2023, economic growth will accelerate again.

It can be said that inflation, understood as an economic process, has already reached its peak, although statistically, price growth may still be temporarily boosted by regulatory factors, including increases in electricity and gas tariffs related to earlier increases in commodity prices. In 2024, the price growth will be significantly lower and in the last quarter of this year, it should return to around 3.5%, i.e. the upper limit for deviations from the inflation target.

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