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Poland Inflation December 2021

Poland: Inflation ends year at over 21-year high

Consumer prices increased 0.90% in December over the previous month, a smaller increase than November’s 1.00% increase. The lower result was driven by moderating price pressures for housing, water, electricity, gas and other fuels and transportation.

Inflation came in at 8.6% in December, up from November’s 7.8% and representing the highest inflation rate since November 2000. As such, annual average inflation came in at 5.1% in December, rising markedly from 2020’s average reading of 3.4% and the highest annual average since 2001. Lastly, core inflation rose to 5.3% in December, from the previous month’s 4.7%.

Regarding the outlook, Kevin Daly and Tadas Gedminas, analysts at Goldman Sachs, commented:

“The government has announced administrative price measures which will have a meaningful impact on inflation this year. […]. At their peak, we estimate that they will dampen headline inflation by 3–3.5pp. While these measures will reduce the peak in inflation, given the temporary nature of the tax changes, it implies a sharp increase in inflation later this year, and more broadly that high inflation will persist for longer. On top of this, underlying inflation remains exceptionally strong and, while headline inflation is likely to fall in the coming quarter, we expect core inflation to continue rising in the near term.”

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