[REPORT] Goodbye to low prices? The cost of living and price levels in Poland in comparison to other EU member states in 2010-2022

The aim of this paper is to analyze the cost of living in Poland in comparison with the EU countries in 2010-2020, and also to try to estimate – on the basis of inflation data – the possible trend in this area in the years 2021-2022. By 2020, the average prices of consumer goods in Poland (taking into account international differences in purchasing power) in relation to the EU average remained slightly below 60 percent, which corresponded to the ratio of GDP in Poland and the EU countries in general. Taking into account the increase in wages, which was higher than the increase in consumer prices during this period, it should be concluded that the cost of living in Poland was falling. Due to the lack of relevant statistical data, it was not possible to extend this analysis to 2021 and the beginning of 2022, which is when inflation accelerated significantly and thus the cost of living increased. Inflation in Poland – due to the fact that the starting point in late 2020 was higher – is now correspondingly higher than in other European countries. It should be expected that the positive trends in the decline in the cost of living relative to earned income observed in Poland in recent years are likely to have stopped in 2022, and possibly even reversed. The growth rate of nominal wages for many households today is lower than inflation, and in addition, due to the tightening of monetary policy, debt service expenses, which are not included in consumer inflation, are rising. This is bound to increase the overall cost of living and create strains on household budgets. The report also presents recommendations for public policies that should be implemented to mitigate the effects of inflation especially on the poorest citizens. Among the recommendations – in addition to conducting a stable and predictable monetary policy – is also an indication of the beneficial effects of deregulation of both companies and the labor market, increasing market competition and the need to refrain from introducing regulations that limit in any aspect the activities of businesses.

DOWNLOAD REPORT IN POLISH