Price war between discount stores and inflation. How much do consumers gain from the dispute?

Luc Williams

On Monday National Bank of Poland published Inflation reportcontaining inflation projection and GDP growth. During the press conference at which the report was presented, the acting director of the Department of Economic Analysis and Research of the National Bank of Poland Jacek Kotłowski was asked about the impact of price competition between the largest retail chains on inflation.

Lidl vs. Biedronka. Biedronka vs. Lidl

“Price companies estimate that it is expensive, companies encounter demand barrierone of the effects is price war – we are observing price drops in the large ones discount stores, which are involved in a price war. Probably not all of them have joined in yet, but if two large chains engage in a price war, other market participants will probably also be affected,” said the acting director of the NBP Department of Economic Analysis and Research.

He noted that it is not known “to what extent this effect is captured by the Central Statistical Office.” He reminded that the Central Statistical Office for the needs of calculating the inflation rate “conducts research throughout Poland, not only in these stores.”

The impact of the price war on inflation

“This effect does not seem very strong to us,” said Jacek Kotłowski. – “It seems to us that so far the impact of the price war on CPI it is 0.1 percent, maximum 0.2 percent.” – added.

IN Inflation report the central bank has developed two versions of the projection – one assumes maintenance protective activitiesconsisting in maintaining a reduced, zero VAT rate on food and tanti-inflation arcs for energy, gas and heat. The second version assumes resignation from all protective activities.

Two paths of inflation development

Central path projection with the extension of protective measures assumes inflation at the level of 3 percent in 2024, 3.4 percent in 2025 and 2.9 percent in 2026. The central path projection without extending protective measures assumes inflation of 5.7 percent. in 2024, 3.5 percent in 2025 and 2.7 percent in 2026.

Two paths of GDP development

NBP he also presented in the Inflation Report economic growth projection. Central projection path in the assuming version maintaining protective activities assumes GDP at the level of 3.5 percent this year, 4.2 percent in 2025 and 3.3 percent in the year 206. In turn, the central projection path in the version in which it is predicted giving up protective measures, assumes a GDP growth of 3.2%. in 2024, 3.6 percent in 2025 and 3.2 percent in 2026.

author: Marek Siudaj


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