Interest rate hikes aggravate inflation problems for Polish families

The Inflation Diary: As Poland raises interest rates to rein in rising prices, families face higher mortgage repayments

By Claudia Ciobanu

WARSAW, July 25 (Thomson Reuters Foundation) – At home in a residential area of ​​Warsaw, the Karolinczaks are feeling the pinch of Poland’s highest inflation since the late 1990s.

First, the family saw the cost of a grocery cart soar. Then their monthly mortgage payments soared due to rising interest rates – part of the central bank’s efforts to contain rising consumer prices.

Read more: The Inflation Diaries series

“We are definitely feeling the pressure,” said Jarek Karolinczak, 44, an accountant, adding that their monthly mortgage payment had increased by 600 zlotys over the past six months.

“But we’re not about to get scared yet – we’re still managing. The (government) grants we get to have three kids are definitely helping us.”

This entitles them to 1,500 zlotys per month in child benefit – a considerable amount in a country where the average monthly salary is just over 4,000 zlotys ($836).

Staple food prices have risen by around 20% over the past year, fueling inflation that is over 15%, the highest since 1997.

The war in Ukraine and the continued fallout from the COVID-19 pandemic have also pushed up energy prices, but some of Poland’s inflationary woes have domestic causes, said Michal Brzezinski, a social inequality expert at the University of Warsaw.

Inflation had already exceeded the 2.5% target set by the country’s central bank in early 2021 and has since accelerated steadily, steadily eroding purchasing power, with no central bank intervention. upstream.

At the OCH Dzielnia charity store in Ochota, western Warsaw, manager Malgorzata Kuleszka, 57, said there were three to four times as many customers as there were a year ago.

It is both low-income Poles and newly arrived Ukrainian refugees who need help, she said.

“The store is full all the time these days,” Kuleszka said. “We can’t even collect enough food to give to everyone who asks for it.”

Kuleszka, who is unemployed and a volunteer at the store, said she is coping with the help of her boyfriend, who has a job.

“What you do is cook a big soup and the whole family eats it – you can always do that with 30 zlotys,” the mother-of-two said. “And it’s nice that if I need to, I can buy food and clothes here at the store.”

Small traders at Rozycki Bazaar in North Praga district said they were struggling to make ends meet as the number of customers fell by about a third from pre-pandemic levels.

“The bazaar will be gone soon,” said Jacek Suska, who runs a dumpling stand he inherited from his mother. “People retire from the business or die and when they die, no one replaces them.”

At her nearby clothing stall, Malgorzata said that although her income had dropped two years ago, she was paying around 2,000 zlotys more each month in terms of tax contributions and bank loan repayments.

“My social security contributions and my level of taxation have increased, my bank loan (repayment) has increased,” Malgorzata said, asking not to give his surname.

Suska said small business owners are being overlooked when it comes to government economic support during tough times.

“We are citizens of the worst class,” he said.

($1 = 4.7825 zlotys)

Explore our interactive map below for more stories about the human impact of the cost of living crisis in our three-part series on The Inflation Diaries

More from Part 2 of The Inflation Diaries series:

Brazilian small businesses struggle to survive as food prices rise

Inflation-weary Zimbabweans forced to find margins to survive

Turkish households despair as inflation nears 80%

Tunisians struggle to buy basic goods as prices rise and economy collapses

Rising costs leave Spaniards isolated and anxious

(Reporting by Claudia Ciobanu; Editing by Helen Popper and Hugo Greenhalgh. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, which covers the lives of people around the world struggling to live freely or fairly. Visit http:// news.trust.org)


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