In Poland, the retail price index rose by over 16.5% last December compared with December 2021. Forecasters had expected a slowdown in inflation to 17.3%, down from 17.5% in November and almost 18% in October, rates not seen in the last quarter of a century.  

The decrease in inflation could have been even more impressive if fuel providers had passed on more of the oil price reduction to their customers. But evidence of a slowdown in the rate of increase in food prices could be observed, which fell from 22.3% in November to 21.5% in December.

The monthly price rise was also significantly down from 0.7% in November to merely 0.2% in December, which was the lowest price increase since early summer 2020. 

Economists predict another inflation rate increase in the first two months of 2023, with prices starting to drop in March.

The Polish central bank (NBP) estimates that inflation should fall from 20% to 10% by December 2023. In other words, the rise in prices will be slower, which also doesn’t mean that prices are expected to fall. 

The NBP insists on the fact that it does not predict its inflation target of 2.5 % to be reached before late 2025. Nevertheless, the slower increase in the inflation rate allowed the majority of the Monetary Policy Council to resist calls for a rise in interest rates, which have held steady at 6.75 % for the last four months.

Image: Unsplash

Author: Sébastien Meuwissen