This year's holidays will be a tough lesson in economics

This year's holidays will be a tough lesson in economics. Today the school year ends and summer holidays begin. Children are happy, but for parents it will be a real lesson in economics. Fuel is now 50 percent. more expensive than in February, and restaurants and hotels went up by almost 16 percent during the year. Additionally, the euro costs PLN 4,70 again. It will be a very expensive vacation, possibly the most expensive ever.

Expensive fuel at stations

Fuel prices at gas stations depend on crude oil prices, this relationship is known to almost everyone. All forms of holiday rest will be especially expensive this year, and in many mishaps - the most expensive in history. Vacation in the country becomes more expensive due to initiation, which at the end of May amounted to as much as 13,9 percent. y / y Today, on average, the basket of products and services surveyed by the Central Statistical Office is more expensive. However, some prices have risen much more. For example, fuel, from the beginning of February this year. more expensive by almost 50 percent (from about PLN 5,30 to PLN 7,90), which significantly increases the cost of journeys. The prices of food are also significantly more expensive, which according to GUS data was 13,5 percent at the end of May. more expensive than the year before. Traveling is affected by the increase in prices in the tourism industry, according to the Central Statistical Office (GUS), prices in hotels and restaurants increased by 15,7 percent. y / y

Galloping inflation

Inflation is high in most of the countries we go on vacation to, so there is no chance of escaping it by going abroad. Among the most important countries where Poles go on vacation, only Turkey (as much as 61,1% y / y) and Egypt (13,1% y / y) have higher inflation. In other countries, inflation is lower than in Poland, but everywhere it exceeds 7%. The prices of foreign holidays will be 20-30 percent. higher than in the pre-pandemic period solely because of rising inflation.

Weak PLN

The second element that makes this year's holiday expensive is the weak zloty. First of all, it increases the prices of foreign trips, although it also influences higher prices of goods imported to Poland. The weaker the zloty, the more expensive trips abroad become. The vast majority of trips from Poland go to countries where the euro is in force or is used as a settlement currency in the tourism industry. Currently, we pay PLN 1 for 4,70 euro, which means that we will pay PLN 1000 for a holiday worth EUR 4700. A year ago and two years ago it would have been about PLN 4500, but then the travel options were significantly limited. In 2019, i.e. in the last year before the pandemic, it would cost us PLN 4250. Only because of the weaker zloty, holidays may now be almost 11% more expensive. than in 2019.

Concerns about the Polish economy

Does the zloty have a chance to strengthen during the holidays? It seems that the zloty will remain weak in the near term. Worse data from the Polish economy may indicate that the cycle of interest rate increases may end soon, and this does not help to strengthen our currency. Recently, the zloty exchange rate has also been subject to greater fluctuations than usual. This is primarily due to the international tension related to the war in Ukraine, but also to concerns about the future of the Polish and world economy. Increased volatility means that tourism businesses run a higher risk of a sudden change in course. Companies protect themselves against this risk, but it generates additional costs. And these costs, in turn, are passed on to the customer, and for this reason the trips become even more expensive.

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.

So during the upcoming holidays, we'll be holding our wallets more often. The worst thing is that there is nowhere to run from the higher prices. Prices go up for holidays both at home and abroad. Even if someone is planning to stay home, they will not escape the effects of higher inflation either.

Data as of June 23.06.2022, 13, 00:XNUMX p.m. CET