Inflation in Poland may soon reach 20 percent!

Inflation in September again reached a record - 17,2 percent. Inflation is also rising in Germany and the euro area. Soon inflation in Poland may exceed 20 percent. We are also awaiting further increases interest rates. Poles in deposits lose 14,5 percent. annually.

Inflation in Poland

In September, inflation in Poland increased again, amounting to 17,2 percent. y / y This is another record of inflation - currently, it is the highest in over 20 years. Another spike in inflation was attributable to increases in food and energy prices amid falling gasoline prices. And this is not the end of the increases, because with this dynamics, inflation may soon reach 20% y / y.

From yesterday, a two-digit initiation amounting to 10 percent. Germany also has. This is the highest reading since the 50s. Here, too, the prices of food and energy have increased the most, which have a significant impact on the increase in the cost of living. At 11:00 CET we will know the results of inflation in the Eurozone, which will also increase, approaching the 10% limit. The most likely reading is 9,7 percent. y / y

Another interest rate hike?

Such inflation readings increase pressure to raise interest rates. The MPC will have to react to the strongly growing inflation, although recently the dynamics of rate hikes in Poland has weakened.

After a series of increases by 0,75 pp, recently the council raised rates by 0,25 pp, signaling the intention to end the hikes cycle. However, a further rise in inflation undermines this plan. Another interest rate hike in the euro zone by 0,75 pp is becoming almost certain. Such increases may help to stop the decline or a slight increase in value of recently very weak currencies - the euro and the zloty.

Record inflation also means record losses of Poles on deposits. On the average annual bank deposit opened at the beginning of October 2021 and completed in September 2022, the real loss of its holder was as much as 14,5%.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.