The delayed demand effect drives inflation
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One of the economic consequences of the pandemic is high inflation. It can be seen very well in the prices of products and services that have increased exceptionally. An extreme example is building materials and services in the construction market – where prices jumped up to 40-50%. What is the cause of such high inflation? Economists point out that it's not the pandemic itself – but the lockdown and ban decisions made in the spring and fall of last year.
"Ever since the pandemic was announced and the bans were made blindly and disproportionately – and then the economic disease that resulted from the lockdown was treated, we have seen a delayed demand effect. An explosion in demand that results from being given one-off money. such a precedent for the state to give away hundreds of billions of zlotys. Now we spend this money, which causes a previously unknown market behavior: demand inflation," Professor Witold Modzelewski, president of the Institute of Tax Studies, explained.
An example are apartments bought for the power, because we have a low, basically negative deposit interest rate. In the opinion of Modzelewski, this time is already running out, so there is no doubt – we are observing the end of this delayed demand. Still, the prices will remain higher.
