Dynamic rebound in the global economic situation, an increase in commodity prices, supply disruptions, rising transport prices, and the weakening of the zloty resulted in a revision of the forecast of the average annual inflation in 2021 to 3.2 percent from 2.6 percent – Pekao economists wrote in the report.

"The intensity of the third wave of the epidemic caused not only the maintenance of the earlier ones but also the introduction of new restrictions. We estimate that in the first quarter of this year, GDP shrank by 1.5 percent y/y. In 2021, we forecast GDP growth by 4.5 percent with increasing downward risks," the report reads.

Due to the dynamic rebound in the world economic situation, rapid increase in commodity prices, disruptions in supplies and rising transport prices, as well as the weakening of the zloty, Pekao economists revised the forecast of average annual inflation in 2021 to 3.2 percent, while earlier they expected inflation to be from 2 6 percent.

They pointed out that according to the preliminary estimate of the Central Statistical Office (GUS), CPI inflation rose to 3.2 percent y/y in March from 2.4 percent y/y in February. The annual growth rate of food and non-alcoholic beverages has decreased to just 0.5 percent y/y and probably reached this year's minimum.

Fuel prices increased on an annual basis (7.6 percent) for the first time since February 2020, recording one of the highest growth in history on a monthly basis (6.6 percent).

(PAP)