Poles tighten belts due to pandemic and inflation

Nearly four out of five Poles experience the spike in prices and over half of Poles have bigger issues with everyday spending than they used to have before the pandemic, the BIG InfoMonitor Debtors Register and the Credit Information Bureau reported. As a result of the lockdown and the coronavirus, Poles are tightening their belts and this reflects in the state of the economy.

The BIG InfoMonitor stressed that inflation has not loosened its grip. According to Statistics Poland (GUS), inflation amounted to 3.1 percent in July. Food and energy contributed to this spike.

It was noted that in the first half of 2020 the prices of goods and consumer services rose even more, namely by 3.9 percent year on year. Nonetheless, BIG InfoMonitor stressed that this outcome was an average value and prices of various products rose in different degrees. And so, the price of fruit spiked by 22 percent, pork by 17.4 percent, cold cuts by 12.9 percent and sugar by 9 percent.

The monitor also noted that housing became more expensive, mainly due to the hike in rubbish collection and electric energy prices. Evermore expensive services have also had their share in inflation (6.6 percent on average). The BIG InfoMonitor noted that financial services spiked the most, that is by 13 percent, hairdressers and cosmetics were up 9 percent, chargeable visits at a doctor up 8 percent in comparison to the first half of 2019, and stomatologist services were up 9 percent.

The BIG InfoMonitor added that prices of clothes went down by 3.4 percent and shoes were down 1.6 percent. Domestic appliances dropped by 1.3 percent, whereas furniture and interior furnishings by 1.1 percent. The prices of fuels, transportation and cars have also dropped.

The price of ‘daily bread’ weighs on Poles

According to debtors register BIG InfoMonitor’s survey, nearly 9 out of 10 respondents noticed the change in prices, with 8 out of 10 respondents claiming that they had been spending more.

As many as 62 percent of respondents admitted that they found themselves leaving more money at the grocers. Only 12 percent expressed an opposing view. Meanwhile, 19 percent of respondents noticed that beauty and dentist services became more expensive.

“In many cases, this is a result of the sanitary regime that compelled companies and people offering such services to adjust. According to GUS, the prices of these services grew by 9 percent on average, albeit not everywhere. Seven percent of respondents said that following the reopening of beauty paroles and stomatologists they managed to spend less there than before the pandemic,” the BIG InfoMonitor report reads.

One-third of the respondents also took note of price drops in housewares, RTV and clothes which was also noted by GUS. In particular, this applied to clothes and shoes that tempt buyers with affordable prices at Summer sales.

The BIG InfoMonitor noted that the balance resulting from the change in prices and the worsening of the financial situation due to the freezing of the economy manifested in over half of the respondents finding everyday expenditures more difficult. It is much harder today to fill the cart with essentials, pay up rent and regulate running bills, the report suggests.

“The fact that the situation for many people became more complex can be inferred from data on untimely paid or unpaid bills and rents as demonstrated in the BIG InfoMonitor Debtors Register and the Credit Information Bureau report. Consumer arrears in April and May rose by over PLN 1.2 bn (EUR 270 mln), which is twofold more than in the entire Q2 of 2019. The number of unreliable debtors rose by 30,500,” the head of the BIG InfoMonitor Sławomir Grzelczak said, adding that the total sum of consumer arrears closed in on PLN 81 bn (EUR 18.32 bn).

Half of the survey’s respondents admitted that they had to resort to their savings or that they experienced difficulties with saving. However, every sixth respondent (17 percent) said that he or she was less worried about everyday spending and 18 percent testified that their opportunities for saving money improved.

“And yet, at the end of the day, everyone says that they have been trying to cut costs and living more frugally than before the pandemic. Only 9 percent answered ‘no’ to the question ‘Do you make savings?’. Two-thirds say that they try to only buy essentials and half of the respondents do not plan any vacation,” the BIG InfoMonitor stressed, adding that one-third of respondents were looking for cheaper service providers. Every third respondent tried to only buy discounted products. Nearly 3 in 10 respondents carried out a plan to keep their bills as low as possible, whilst 15 percent put more money from the government’s 500+ child benefit to daily spendings. Nine percent bought on an instalment plan more often than before.

The head of BIG InfoMonitor said that “the survey shows that everyday life became harder in terms of finances. The overall atmosphere and worry brought about an increased tendency for saving and cutting expenses. The negative attitude results in us spending less and this, unfortunately, additionally aggravates the economic downturn, which makes the fear about the future grow.”

Mr Grzelczak admitted, however, that caution was advisable as overestimating one’s financial capabilities could end up with being entered into the Debtor Register. The BIG InfoMonitor reported that over 2.2 mln debtors featured in its register at the end of May. These people were mainly reported by telecom companies, cable TV operators, courts, cooperatives and real estate managers, insurance companies and lessors.

Another 1.2 mln people were late at least 30 days with paying up their loan instances worth at least PLN 200 (EUR 45.25).