Inflation will average close to three percent in 2020, after peaking in the first quarter. In January inflation will reach 4.0 percent Marta Petka-Zagajewska, the Head of Macroeconomic Research at PKO Bank Polski told.
In our view in the first quarter inflation will peak and the rest of 2020 will bring some moderation. Inflation will then will stay close to three percent.
The spike in inflation seen in the Statistics Poland figures for the last month of last year were due to rises in the price of food and services.
“Service prices are growing by seven percent, driven by rising costs of labour,” the economist said. However the team at Poland’s largest bank do not believe that the extra pressure of the 16 percent rise in the minimum gross wage to PLN 2600 (EUR 610) will necessarily send prices higher.
“We believe that many employers raised prices at the end of last year in expectation of an increase in wages in 2020.”
One factor which is difficult to predict is the ‘drought factor”, which led to fruit and veg price increases after last year’s poor harvests. If there is a drought, inflation could rise to five percent, the economist anticipated.