In October, inflation in Poland, according to preliminary data from the Central Statistical Office (GUS), rose to 5 percent, the highest level since December last year when it reached 6.2 percent. This is primarily due to the increasing cost of food, which monthly prices rose by 0.7 percent, while petrol prices fell by 2.2 percent. Currently, inflation is the greatest risk to their savings for investors – according to 26 percent of those surveyed. From October, due to inflation, the top performing one-year deposits have started to generate losses again.
In October, inflation on an annual basis increased to 5 percent from 4.9 percent in September. Since March, when it fell to a record low of 2 percent, inflation has been steadily rising. Elements driving this increase included the increase in VAT on food in April and a partial lifting of electricity prices from July onwards.
On a monthly basis, inflation in October increased by 0.3 percent, while the price of food increased by 0.7 percent. This is the result of numerous weather anomalies in Poland and around the world, affecting the prices of products such as coffee, cocoa, apples, and oranges. In October, energy prices went up by 0.3 percent, whereas petrol prices went down again by 2.2 percent.
The inflation rate is key for the Monetary Policy Council’s decision on interest rates. Next Wednesday (6th November), we are expecting another MPC decision. There is no chance of cuts with the current level of inflation; the earliest possible date for such action is the second quarter of 2025. It’s worth mentioning that the MPC’s decision will come a day after the US elections and a day before the FED’s decision, which is likely to lower rates in the US by 0.25 percentage points.
October was also an important month for bank deposit holders, whose deposits after several months of break, started to generate losses again. The rising inflation and the decline in annual deposit rates at the end of last year meant that the best one-year placements ended in October, resulting in real losses of -0.19 percent for their owners, and even -1.05 percent when taking into account the capital gains tax. At the beginning of the year, owners of one-year bank deposits were still making real gains, but these were strictly dependent on the level of inflation. In March, when inflation was the lowest, the real gain from deposits reached a record 3.67 percent. However, with each subsequent increase in inflation, the profits began to fall, and from October again became negative.
According to a survey by eToro Puls of Individual Investors, inflation is currently the biggest threat to Polish investors – as recognized by 26 percent of respondents. They are less concerned about the state of the global economy (20 percent) and the risk of an international crisis (20 percent). The state of the Polish economy is the most important issue for only 11 percent of investors.
Author: Paweł Majtkowski, eToro market analyst
Source: https://ceo.com.pl/inflacja-w-polsce-znow-w-gore-najwyzszy-poziom-od-grudnia-ubieglego-roku-23742
