Authorities seek to allay inflation fears
The evidence of booming retail sales demonstrates that the public has been listening to these gloomy predictions.
Retailers have not had it so good in a long time, with sales in March soaring by an impressive 12.1 percent. Economists are, however, concerned that the surge is temporary and that sour consumer sentiment, based on inflationary expectations connected with accession, will likely depress domestic demand as of next month.
A recent report commissioned by the Polish Central Bank (NBP) supports these expectations, though adding that the rise in inflation is going to be no higher than 0.9 percent in the second half of the year. The report estimates the impact of accession on prices to be around 3.5 percent over the next three years.
Most products will not be affected, with the prices of 52 percent of goods remaining unchanged by accession, while one third will actually become cheaper, with such goods as expensive alcohols and pasta leading the way. A mere 15 percent of goods will be more expensive in the EU due to higher VAT and excise rates.
In the case of sugar, the price will double as a result of the tighter regulations of the European-wide market. Marek Przeździak, secretary-general of the confectionery producers trade association, expresses the opinion of many Poles in saying that the EU is afraid of competition from this country, should sugar prices remain at their current level.
"It is ironic that we should have overthrown communism only to fall into an even more regulated system," he says. But sugar is an individual case, as most prices are unlikely to be directly affected. The NBP and the anti-trust authorities are, however, concerned that the popular expectations of the inflationary impact of accession could be used by unscrupulous producers to conceal illegal price arrangements.
"We must not allow for the public to accept price increases," said Leszek Balcerowicz, NBP president. "It is simply not true that large prices rises are inevitable." Despite his optimism, however, many economists think that the inflationary pressure caused by accession could lead the Monetary Policy Council (RPP) to rethink the bias of monetary policy.
he International Monetary Fund said last month that the extra economic growth caused by post-accession will drive up demand for loans and could substantially add to inflation over the next two to three years.
The NBP expects that inflation could reach the upper regions of the central bank's target, around 3.5 percent, by the end of next year. That would represent more than a doubling of the current rate that has hovered around 1.6-1.7 percent for more than a year.
Retailers have not had it so good in a long time, with sales in March soaring by an impressive 12.1 percent. Economists are, however, concerned that the surge is temporary and that sour consumer sentiment, based on inflationary expectations connected with accession, will likely depress domestic demand as of next month.
A recent report commissioned by the Polish Central Bank (NBP) supports these expectations, though adding that the rise in inflation is going to be no higher than 0.9 percent in the second half of the year. The report estimates the impact of accession on prices to be around 3.5 percent over the next three years.
Most products will not be affected, with the prices of 52 percent of goods remaining unchanged by accession, while one third will actually become cheaper, with such goods as expensive alcohols and pasta leading the way. A mere 15 percent of goods will be more expensive in the EU due to higher VAT and excise rates.
In the case of sugar, the price will double as a result of the tighter regulations of the European-wide market. Marek Przeździak, secretary-general of the confectionery producers trade association, expresses the opinion of many Poles in saying that the EU is afraid of competition from this country, should sugar prices remain at their current level.
"It is ironic that we should have overthrown communism only to fall into an even more regulated system," he says. But sugar is an individual case, as most prices are unlikely to be directly affected. The NBP and the anti-trust authorities are, however, concerned that the popular expectations of the inflationary impact of accession could be used by unscrupulous producers to conceal illegal price arrangements.
"We must not allow for the public to accept price increases," said Leszek Balcerowicz, NBP president. "It is simply not true that large prices rises are inevitable." Despite his optimism, however, many economists think that the inflationary pressure caused by accession could lead the Monetary Policy Council (RPP) to rethink the bias of monetary policy.
he International Monetary Fund said last month that the extra economic growth caused by post-accession will drive up demand for loans and could substantially add to inflation over the next two to three years.
The NBP expects that inflation could reach the upper regions of the central bank's target, around 3.5 percent, by the end of next year. That would represent more than a doubling of the current rate that has hovered around 1.6-1.7 percent for more than a year.
