Due to low food demand and a pricing war between two of Poland's largest discount supermarket chains, the impacts of a recent VAT rise on some items from zero to five percent have been mitigated, Adam Glapiński, the governor of Poland’s central bank (NBP) said during a recent press conference.
Poland brought back the VAT tax on basic foodstuffs on April 1, after more than two years of a zero rate that was aimed to reduce the impact of high inflation on households' budgets.
The anticipated effects have been, however, mitigated by ongoing competition between two of the nation’s largest discount supermarket chains, Lidl and Biedronka, alongside muted food demand.
Glapiński noted that while the VAT increase would naturally lead to price hikes, the actual market impact remains moderated due to competition and the current “limited” demand for food.
Real wages increase
Additionally, Glapiński highlighted concerns over rapidly increasing real wages in Poland, driven by inflation and hikes in the minimum wage.
According to data from the Central Statistics Office (GUS), real wages saw a 12.8% year-on-year growth in January.
This surge in real wages, alongside an accelerating economic activity that is trending towards 4% growth, presents a new set of challenges for Poland’s economy, the official assessed.
“We now have such a situation at the moment that real wages are growing very fast and this is starting to concern us,” Glapiński remarked, pointing to the complexities of managing economic growth against inflationary pressures.
He also assessed that inflation in Poland may rise in the coming quarters, though the extent of the increases are uncertain.
The anticipated effects have been, however, mitigated by ongoing competition between two of the nation’s largest discount supermarket chains, Lidl and Biedronka, alongside muted food demand.
Glapiński noted that while the VAT increase would naturally lead to price hikes, the actual market impact remains moderated due to competition and the current “limited” demand for food.
Real wages increase
Additionally, Glapiński highlighted concerns over rapidly increasing real wages in Poland, driven by inflation and hikes in the minimum wage.
According to data from the Central Statistics Office (GUS), real wages saw a 12.8% year-on-year growth in January.
This surge in real wages, alongside an accelerating economic activity that is trending towards 4% growth, presents a new set of challenges for Poland’s economy, the official assessed.
“We now have such a situation at the moment that real wages are growing very fast and this is starting to concern us,” Glapiński remarked, pointing to the complexities of managing economic growth against inflationary pressures.
He also assessed that inflation in Poland may rise in the coming quarters, though the extent of the increases are uncertain.
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