The Polish economy has been climbing upwards since mid-May. The July PMI made a record jump and is also higher than expected. Polish companies, like others in Europe, fear the fall wave of the pandemic. The level of inflation and corporate investment may be decisive for the future of the economy. Relatively high inflation may be worrying, however, according to economists, it should decrease in the next dozen or so months.
"We have high inflation in Poland, currently the highest in the European Union. This is for several reasons. First, it is still a legacy of the high wage growth before the pandemic. Inflation always reacts with a long delay to changes in wage dynamics, so we had a crisis hit in April and it takes several months for inflation to react to it. The second reason is the rising cost of doing business related to the pandemic. In many areas, such as hygiene services, dentists, hotels and restaurants, it has forced sanitary solutions that are expensive, and entrepreneurs have added them to their bills," Ignacy Morawski, the director of SpotData, said.
According to the Eurostat methodology, in June 2020 inflation in Poland amounted to 3.8 percent and was the highest in the European Union. For comparison, in Hungary it was 2.9 percent, in the Czech Republic 3.4 percent, and in Romania 2.2 percent. In turn, in Cyprus, Greece, Estonia and Latvia, prices were lower than a year ago. The average dynamics for the European Union was 0.8 percent.
Ignacy Morawski emphasizes that inflation is much more difficult to forecast than some other economic variables and that it is often very unpredictable. Therefore, shocks are possible that will disturb this pricing process one way or the other. At the same time, the Polish economy began to recover from the post-epidemic hole very vigorously.