From 1 euro beer to 5 euro beer…and back

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How did we get to the twenty-two zloty pint, when just a blink of an eye ago - 8 years ago you could buy a round for four friends for that, and what does that say about inflation and possible deflation in a year or so?

As a post pandemic anti-social old git I don’t go out nearly as much as I used to, and when I do, like last night, I moan about the price. And considering inflation in Poland is now 12.3 percent and in the US it is 8.3 percent, it got me considering what life was like during deflation.

Back in 2014, I was cycling a lot with a group of suburban dads and a regular night on the town afterwards would be a trip to the then-trendy prefabricated pavilions behind Nowy Świat, the now down-at-heel main shopping drag of Warsaw’s city centre. Beer was served in a plastic tumbler from a factory brewed keg, served by a guy who looked like he would stab you as quick as serve you. It was consumed outside and a lot of it got spilled in the swirling tumult masses piling in there. Cost - 5 PLN- eur 1.20 at the time.

The world was just recovering from the financial crisis of 2008-2009, house prices were still lower than they were in 2007 and Poland was entering into a two-year period of deflation that lasted till 2016, led by oil prices, which were sliding down from hundred dollar-a-barrel highs, and food and beverage prices. Cheap was cheerful. Supermarket chains were at war with discounters and reporting that consumers were going for cheaper varieties of cheese, worse cuts of meat, local seasonal veg, and re-using tea bags.

Fast forward to May 2022 and a glitzy, new-to-me brewers pub, surrounded by luxury flats, near a shining metro station in the financial district, with 12 taps on display for five euros and upwards. Service was terrible, but it didn’t matter to them as the queue snaking round the bar was 10 minutes long.

Now you may say that the craft beer market and the avocado sandwich were already beginning to boom at the earlier date and I could have found a dear beer then too. True, but I was hanging about then and now with a similar demographic, and simply, overall quality expectations have changed. Geopolitics aside, inflation has risen partly because the basket of goods we buy has mozzarella balls and fresh lychees in it rather than processed cheese and cucumber jars.

The question now is will recession drag us back to our earlier dingier habits? On a global scale, the crashes of the last few weeks have affected tech stocks more than any others. It's the Zooms and Netfixes that have lost their pandemic shine-going back to early 2020 values. But with them, the companies that run the tech engine under the bonnet have also plunged - the Microsofts and Apples, as well as integrators, whose projects are being put back.

A Warsaw friend told me a couple of months ago that his bank was trying to get employees to move into their new offices, which had open space floors like football pitches. People didn’t want to go in, because they were so empty. A few weeks later he was laid off. Properties are financed by pension funds, who alo invest in “solid stocks” that have fallen significantly. Investment, already low, may hibernate.

So prices will come down because we will scale back. We will want smaller offices, tech will be in demand wherever it can reduce costs, we will change our shopping habits and put off big spending plans.

Back in 2008, I remember asking a Polish friend how he thought Poland was going to cope with the crisis. He said “ Crisis? My whole life has been a crisis. I remember martial law, the fall of communism, the millennium bug, the tech bubble bursting, mass unemployment. We are Polish. We know how to live in a crisis much better than you Western people”