September 21, 2021

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Finance Minister: We are raising inflation.  Poles get clear signals: salaries are more than prices

Finance Minister: We are raising inflation. Poles get clear signals: salaries are more than prices

According to GUS data, in July inflation On an annual basis in Poland it reached 5%, the highest level in ten years, not counting this reading from May 2011 – for twenty years. Economists’ forecasts indicate that in the following months of the year we can see similar readings of the growth rate SinAnd at the end – Significantly higher, about 5.2-5.5 percent.

However, those who are concerned about such a pace of price hikes are assured that it is average a wage In companies growing faster. This data has been cited, among other things, by President of the National Bank of Poland Adam Glapinski (“Inflation does not have a negative effect on the wealth of Poles’ governors. All salaries and pensions are growing faster”) and Prime Minister Mateusz Morawiecki (“When wages rise twice as fast as the rate of inflation, it means that for a similar set of profits we can buy more kilograms of sugar, and more liters of milk”).

New data on salaries in Poland. Can buy more sugar

Morawiecki is pleased that wages are growing faster than prices

On Thursday, August 26, we once again witnessed an “attack” on such interpretations. The Prime Minister was again in the leading role Matthew MoravekiWho said during the Vision Development Forum that “the main indicator of our economic development and the Polish system is the increase in wages faster than the increase in prices”. Morawiecki Of all the economic data, he explained, the wage growth stats “really mattered to him the most.”

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The Prime Minister spoke in a similar vein on TVP1’s “Gość Wiadomości”.

I’m worried about inflation, I’m afraid prices will go up. But I’m glad Poles’ salaries are rising faster

– said Morawiecki.

.Morawiki: Inflation is worrying, but wages are rising faster. We look at the data [WYKRES DNIA]

Finance Minister: We ourselves are raising inflation

Finance Minister Tadeusz Kosinski is also not worried about the highest inflation rate in years. In an interview with Radio One He noted that one had to be careful, but the current readings “have not yet reached a worrying level.” He also stated that the de facto government was “working to increase inflation” by itself.

We ourselves raise this inflation by raising the minimum wage above inflation, which I think is a very good thing.

– said the Minister of Finance.

MPC: Price dynamics will remain well below the wage growth rate

Also on August 26, the National Bank of Poland published a description of the Monetary Policy Board’s discussion of meeting on July 8 this year. This was the last decision-making meeting of the MPC, and the next meeting will take place in September. Most importantly, it was a meeting during which the MPC members did not know of course the annual inflation for July, the last of which was 4.4%. From June this year.

One sentence describing the discussion has caught the attention of some economists.

The majority of Council members indicated that, in line with expectations, over its entire horizon, price growth will remain well below wage growth – including minimum wages – which will translate into a marked improvement in the financial position of households and households. It will reduce the accumulation of wage pressure.

– wrote in the document.

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The July forecast of the Polish National Bank shows that the average annual inflation in 2021 will reach 4.2%, and the wage growth rate will reach 8.1%. In the years 2022-2023, prices will rise on average by about 3.3-3.4% per year, salaries 4.5 pp. higher – by 7.8-7.9 percent.

“This is really a drama.”

It can be said that there are two points of view in the market. The first is that presented in, among other things by members of the government, most (though not all) members of the MPC, but also, of course, some economists. He points out that current and future inflation, which has increased relative to the inflation target and highest in years, is not a disturbing (or at least less alarming) phenomenon until average wages in the economy are raised at a faster pace than prices. go up.

However, there are some economists who dislike such discourse.

The fact that even the MPC is starting to use the argument in official communications that all is well as long as “wages are rising faster than inflation” is already a drama.

– wrote on Twitter the economist at BNP Paribas Wojciech Stępie.

In a recent interview with, the economist Dr. He explained that the main task of the head of NBP, Adam Glapinsky, is to maintain a stable price level.

I regard such statements, like his last ones, that inflation does not have a negative effect on the wealth of the governor of the Poles as an attempt to evade responsibility for his most important task. These words lead to higher inflation expectations and thus higher actual inflation. Glapiński gives the indication that there is really no problem with whether inflation will be 5 or 10 percent, because we will succeed in that, because the government will raise salaries. These are very dangerous statements that will only have negative repercussions in the longer term

Karnovsky argued.

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