Today’s inflation is unfortunately the fruit of neglect of the last few years – says economist prof. Witold Orłowski. In his opinion, even the anti-inflationary shield prepared by the government will not help. And some of the solutions that are to be included in it, even hurt. – The answer is not to sprinkle people with money so that they do not feel the price increase. This, after all, will drive inflation even more – warns the expert in an interview with Business Insider Polska.
- From the beginning of November, the government has been announcing the presentation of solutions which it has wrapped in the name of the “anti-inflationary shield” for marketing purposes. So far it is known that it is to consist, among others, on the distribution of energy vouchers to Poles and the planned reduction of excise duty on energy carriers. We should find out more this week
- According to prof. Witold Orłowski, the government is dealing today with the effects of its long-term policy. – Stimulating consumption without caring for investment was a simple recipe for inflation, which many economists warned about a long time ago – tells Business Insider
- But the anti-inflationary shield will not solve the problem. What’s more, some solutions, such as energy vouchers, will drive it even more. – Printing more money is not a way to inflate, but only to mitigate its effects – emphasizes prof. Orłowski
- You can find more such stories on the Onet homepage
6.8 percent – this is the last inflation reading published by the Central Statistical Office. This means more or less that prices in October were on average almost 7 percent. higher than a year ago at the same time.
However, this is only average. There are goods and services that have increased in price much faster. For example, gas for cars. Here prices are more than 53 percent higher. It is not much better with other fuels. Here, for a year, it became more expensive by over a third.
Much faster than average The prices of bread (9.4%), oil (over 10%) and several types of meat are also rising. For example, beef and poultry are 9.1 and 18.8 percent more expensive, respectively. Pork is cheaper.
In addition, the Central Statistical Office recorded over 18 percent an increase in waste collection fees, as well as significant increases in electricity, gas and fuel prices.
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PiS will respond with another shield
PiS noted that all this bothers Poles more and more. And since Poles, so also voters. So much so that inflation expectations among the public are the worst in 25 years.
What’s more, there are many who blame the high prices on the government of Mateusz Morawiecki and the activities of the National Bank of Poland. Few, in turn, see the European Union guilty, which the rulers often try to suggest, e.g. in the context of rising energy prices.
So the rulers decided to start reducing the effects of inflation, because they see that this does not help their survey results, and the price increase – contrary to forecasts – is not so temporary. They resorted to a proven pandemic method – they will build another “shield”.
After “anti-crisis” or “financial”, it is time for “anti-inflationary”. Its assumptions are still unknown, although the first mentions appeared at the beginning of November.
Piotr Patkowski, Deputy Minister of Finance, started. Later, such plans were confirmed by the government spokesman, who announced on November 9 that the details will be known “next week”. That is, the one who is long behind us. Another statement is again Patkowski, who on November 17 in the Sejm promised that the facts would appear “within a week”.
There will be vouchers for Poles
At the same time, the deputy finance minister revealed what is to be included in the latest shield.
– It will be an energy voucher that is to amortize the rising costs of heat, electricity, gas and petrol. We will not link it with the accounts of Poles, Poles will, as part of their own decisions, reflect on what to allocate these funds to. We want to amortize these costs, which are now rising, but we do not want to tie Poles’ hands. It will be an amount depending on the size of the household, paid monthly – said Piotr Patkowski.
– It will be, inter alia, support for people who will feel the effects of increased energy prices. Next year there will be solutions that citizens will actually feel directly when it comes to helping to fight inflation – Government spokesman Piotr Muller added.
Therefore, the government admits directly that adding money is to be one of the basic elements of the shield. Not only the energy poor, but also pensioners, as the new climate minister Anna Moscow said. PiS uses well-known solutions: it simply sprinkles Poles with money in their pockets.
Will such a solution help in the fight against inflation? We asked the chief economist of PwC prof. Witold Orłowski. A well-known expert has no doubts that the effect will be counterproductive.
– If it turns out that the fight against inflation is about printing more money, this is a simple recipe for fostering inflation and its further increase – says Business Insider, prof. Orłowski.
However, he quickly adds that this does not mean that the poorest should not be helped to cope with rampant inflation. However, you have to do it wisely.
Anyway, today’s levels of the price increase index are – apart from objective reasons – also the fruit of many years of government policy. – That’s how it ends years of stimulating consumption while ignoring investments. Today we have the effects of this, completely disregarding the legitimacy of individual social programs of the PiS government – explains prof. Orłowski.
See also: Record inflation in Poland. “NBP” added fuel to the fire
The economist explains that in addition to social programs, there are, for example, accelerated increases in the minimum wage and the so-called high deficit policy. – It was the government that de facto brought about today’s situation. And he certainly helped her a lot – says our interlocutor.
– The long-term neglect in the energy policy certainly did not help either. If several clean power plants were to be built instead of almost PLN 2 billion for the unit in Ostrołęka, the increase in energy prices would probably be slightly lower today – concludes Prof. Orłowski.
Anyway, he is not the only one who is skeptical about the concept of the anti-inflationary shield. For example, prof. Jerzy Hausner, former minister of economy and member of the Monetary Policy Council in 2010-2016.
– As I suppose, and I do not know it, we are dealing with a situation of announced compensations. I just want to say clearly – this is racing with your own tail. if […] we will index pensions and benefits, e.g. we will raise the minimum wage for the second time on 1 July I want to make it clear that inflation will continue to rise and we will continue to drive it through such a mechanism – said the economist at RMF FM.
The station also informed that in addition to compensations and energy bills, the government is also planning to limit refining margins by law. All this to minimize the increase in fuel prices at stations.
On Monday, the prime minister revealed that the government was planning to cut the excise tax on energy carriers. However, he did not provide details. It is worth emphasizing, however, that just such activities will not work as pro-inflationary as energy vouchers.