Price caps and economic measures in Central Europe: more and more countries are protecting themselves against inflation

Price cap in Poland

The Polish government has already limited electricity prices and capped energy prices for the population at PLN 500 per megawatt. Although the restriction was originally introduced by the right-wing government in 2022, the new left-wing leadership maintained and extended it, namely so that it would only expire after the Polish presidential election in 2025.

Polish Climate Minister Paulina Hennig-Kloska confirmed in recent days that government intervention is still necessary, as electricity tariffs are not expected to decrease. The decision will be made based on the price proposals submitted by service providers by April.

Inflationary pressures in Central Europe

Inflation waves in Central Europe are traditionally stronger than in Western Europe. This is partly due to lower incomes and partly because the region’s economies are more sensitive to external price changes. In Poland, inflation stood at 4.7 percent at the end of the year, but the January data, due to be released on Friday, could well contain unpleasant surprises.

Consumer confidence in Poland is also weak, with the index nearing a one-year low and retail sales stagnating in the final months of the year. While price increases could dampen consumption, Hungary’s example shows that high inflation does not necessarily reduce the willingness to buy.