The negative impact of inflation on business activity in Poland is gradually weakening from quarter to quarter, though a sizable group of those “feared” remains. According to the EFL Barometer for the first quarter of this year, 33% of companies believe that their business condition will deteriorate due to inflation in the coming months. This is 11 percentage points less than a quarter earlier and 14 percentage points less than a year ago. Medium enterprises (20%) are decidedly less worried than micro and small ones (both indicate 37%). The HoReCa sector feels the most threatened by inflation, even though worries are fading (48% compared to 62% in the fourth quarter of 2023). Transport companies fear rising prices the least (20%).
“In recent months we have been dealing with a steadily lower level of inflation. We ended last year with a result at the level of 6.2% on an annual basis. Let’s recall that we started 2023 with over 17% price growth. If we take into account the average annual inflation, we will also see that entrepreneurs have a basis for more optimistic assessments of the future. According to GUS data, in 2023 prices increased by an average of 11.4% on an annual basis, a year earlier the average annual inflation was 14.4%. This was the first drop in this indicator since 2018. That’s why most sectors expect the coming months to be decidedly better and ‘cheaper’ for them. This optimism is less shared by restaurateurs and hoteliers, which considering that rising food prices play a major role, is no surprise,” says Radosław Woźniak, board president of the EFL.
According to the EFL Barometer for the first quarter of this year, inflation continues to cause concern among Polish entrepreneurs, but the group of those “feared” is gradually shrinking from quarter to quarter. 33% believe that price growth “will negatively affect” their activities in the coming months. This result is 11 percentage points lower compared to the previous measurement at the end of last year (44% in the IV quarter of 2023). The percentage of entrepreneurs predicting a stagnation of the situation remains high (43% vs. 47% in the fourth quarter of 2023). An even greater improvement in “inflationary moods” can be seen when comparing the results of the first quarter of this year with those of the same period last year. In the first quarter of 2023, 48% of companies fear the negative impact of inflation on their business operations.
Considering company size – similar to the previous quarter, the larger the company, the less it fears the negative impact of inflation on its business. 20% of medium-sized companies believe that high inflation may deteriorate their business activity in the coming months. In the group of micro and small companies, this rate is 37%.
Every industry is slightly less concerned about inflation than at the end of last year. Similar to the previous quarter, the highest percentage of entrepreneurs who fear the negative impact of inflation on their business is in HoReCa. Almost every second hotelier or restaurateur fears rising prices (48%). However, it is worth emphasizing that compared to the previous quarter, we see a significant drop in negative opinions. In the fourth quarter of last year, the indicator was 62%.
The least concerned about their future – also similar to the previous quarter – are transport companies, among which only 15% of respondents fear the negative impact of rising prices on operations. This figure is 14 percentage points lower than in the fourth quarter of 2023. In construction, 30% of companies fear inflation (- 8 percentage points), in trade 35% (-16 percentage points), in industry 27% (-14 percentage points).
The first measurement of the EFL Barometer this year also shows that micro, small and medium-sized enterprises in Poland are becoming increasingly accustomed to the effects of the war being waged beyond our eastern border. 7% of respondents indicated that the war in Ukraine will worsen their company’s condition over the next six months. In the fourth quarter of 2023, 13% of entrepreneurs thought so. The majority, namely 82%, stated that their situation would remain unchanged.
The main reading of the EFL Barometer for the first quarter of 2024 is 52.5 points and is 2.1 points higher than the previous measurement.
