Grant Thornton pointed out that last year average annual inflation was 11.4 percent y/y, it was an exceptionally high result compared to the last two decades, but slightly lower than the reading for 2022 (14.4% y/y).
Inflation pressure will increase
According to the study published on Wednesday, 65 percent medium and large companies in Poland intends to in the next 12 months raise the prices of their products and services, and only 2 percent I want to lower them. In 2023, this relationship delivered 76% respectively. up to 2 percent; in 2022 (71% vs. 5%); in 2021 (40% vs. 4%).
Grant Thornton pointed out that net ratio (the percentage of companies planning price increases minus the percentage of companies planning price reductions) is 63 points in 2024. percent “This is one of the highest results of the study, suggesting that inflation pressure is still strong, but much lower than last year, when the net index was a record 74 points. percent,” it was emphasized.
Where will prices rise the most?
As reported, out of 29 countries covered by the “International Business Report” study conducted by Grant Thornton International, seven recorded a higher percentage of medium and large companies planning price increases than in Poland. These are Türkiye (78 percent), Nigeria (73 percent), South Africa (71 percent), Argentina (68 percent), Indonesia (67 percent), India and the Philippines (66% each). Lowest scores noted in South Korea (26 percent), Thailand (32%), in Italy (34 percent), China (35%) and in Greece (38 percent)
“The study shows that the tendency to increase prices is high all over the world, but forecasts of price increases in 2024 are lower in most countries than a year ago. The average percentage of companies from all surveyed countries that plan to increase prices in the next 12 months has decreased since last year from 56% to 53%. The biggest decline year on year was recorded in Ireland (from 68% to 42%), Sweden (from 74% to 38%) and Italy (from 49% to 34%). In turn, the largest increase in the percentage was recorded in Vietnam (from 38% to 53%), Malaysia (from 41% to 53%) and Canada (from 44% to 52%).
Operating costs continue to rise
Grant Thornton explains that companies' constant tendency to raise prices it is the result of several overlapping processes. Mainly it has been going on for over two years war in Ukraine and energy crisiswhich causes costs of producing goods and implementation of services are growing significantly. In the survey, companies declared that 83 percent medium and large companies claim that high energy costs are a “strong” or “very strong” barrier to development. In 2023 it was 85%, and in 2017 – 16%.
It was noted that in the conditions high inflation and low unemploymentthe pressure from employees is growing wage increases. Companies surveyed by Grant Thornton indicated that for 86 percent of them labor costs are a significant barrier.
Prices are rising, Poles are crying and paying
It was added that thanks to the high wage dynamics and social transfers, consumer demand remains at a high level on the market. “Even though the prices of consumer goods and services have been constantly increasing in recent months, consumers are not significantly limiting their purchases, which confirms that demand remains strong,” it added.
“All this makes entrepreneurs strong cost pressure and for sustenance profitability they want to pass on these high operating costs to customers. Meanwhile, customers, still having relatively high incomes at their disposal and gradually becoming accustomed to high inflation, finally accept price increases,” we read in the study.
Grant Thornton chief economist Marcin Mrowiec indicated that in 2024 he expected decline in inflation to approximately 5.4 percent average per year. “What is important, however, after a strong decline in the first quarter, when CPI may temporarily reach levels below the inflation target (2.5%), will soon inflation will start to rebound significantly“- added the quoted expert.
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