Price formation in Poland
Since June 2021, Poland's consumer price index (CPI) has steadily increased, reaching a record high of 18.4 percent in February 2023. By comparison, annual inflation in 2021 was 5.1 percent. In 2022, prices of goods and services increased by 14.4 percent year-over-year. A slight decline in 2023 followed this. Compared with other Central and Eastern European countries, Hungary had the highest inflation, reaching 17 percent. That year, the average price increase for the EU countries was 6.4 percent.The most significant impact on the consumer price index in Poland was higher food and non-alcoholic beverages, as well as housing prices, including energy carriers. Food and non-alcoholic beverages prices increased by over 15 percent in December 2023. However, Poland's CPI is projected to reach 5.7 percent in 2024. By 2025, the country's CPI will fall to 3.5 percent.
Impact of inflation on households
Polish households were most affected by the rise in food prices, with food additives showing the most significant increase at 15.3 percent in 2023.On a year-on-year basis, the price of a basket of essential products in retail chains in 2023 increased by 4.3 percent on average, with a value of nearly 280.2 zloty. The highest price decreases were recorded in Auchan stores (-10.4 percent). The highest increases were seen in the Netto chain (22.5 percent).
Rising grocery prices have translated into shopping behavior changes for Poles. Four out of 10 consumers chose to buy fewer alcoholic beverages, clothing, footwear, or cosmetics. In contrast, 17 percent have given up buying electronics altogether. However, the situation has improved over time. By the end of 2023, 41 percent of Poles were severely affected by inflation. By comparison, their percentage was down 20 percentage points compared to the beginning of the year.
Despite the rapidly rising prices, Poland is still one of the countries in Europe where the costs of essential products are much cheaper than in the European Union. For comparison, prices of food products in 2022 were 27 percent more affordable than the EU average, and Poles paid 47 percent less for communication services.
