Inflation in Poland

A short history of inflation in Poland

Transition Hyperinflation (1989 to 1990)

Poland's serious inflation came at the very end of communist rule. Prices rose several hundred per cent in 1989 and 1990 as the last communist government lost control of the budget and the first non-communist one freed prices in a single step on 1 January 1990, a deliberate shock intended to clear the shortages that decades of fixed prices had produced.

The Descent (1995 to 2002)

What followed was a long fall rather than a second crisis, from the high teens in the mid-1990s into low single figures within five years. Two things made it stick. The zloty was redenominated at ten thousand to one on 1 January 1995, drawing a line under the old currency. Then in 1998 a newly independent Monetary Policy Council adopted an inflation target, well ahead of Poland's neighbours, and has worked to one since.

Post-Covid Inflation (2021 to 2023)

In Poland, prices rose fastest in February 2023, at 17.2%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.