WARSAW (Reuters), – Poland’s prime minister announced Tuesday that the country will reduce its value added tax for petrol, food, and gas as part of a second round of measures designed to curb rising inflation.

A rapid increase in prices has caused a significant reduction in household incomes. This is a major problem for the government, which has focused its popularity on increasing living standards of ordinary Poles via generous social benefits.

Mateusz Morawiecki stated that the programme was designed to put as much money as possible in the pockets of Poles at a press conference.

Many of these measures were previously announced. They include a reduction in the VAT on food and fuel to zero and sharp cuts in the VAT on electricity, heating, and fuel.

Poland was hit hard by Europe’s Energy Crisis. It began last year with the removal of COVID-19 limitations, which placed huge demands on already depleted stockpiles of. The region has been suffering from a rise in fuel costs during winter. This has led to an increase in the cost of living.

Morawiecki claimed that anti-inflation steps would run the budget between 15 and 20 billion zlotys (or $374 to $4.99 billion).

Law and Justice, the ruling nationalists of Morawiecki, have had a tough start to this year. Businesses are complaining about rising energy prices and errors in an economic program that was supposed to lower taxes but which resulted, for example, in lower salaries for teachers and other workers.

Reports that schools and hospitals had gas bills up to ten times the cost of a year earlier were particularly damaging.

In the latest anti-inflation package, there is a proposal for these institutions to be included in a tariff system that protects household from rising gas prices.

This (mechanism), meant that gas bills increased for householders was still large, however, a 54% increase on average for these customers was compared to many hundred percent…for other entities, it must be said that it was very reasonable,” Jacek Sasin, Deputy Prime Minister, stated public radio Tuesday morning.

According to economists, the government’s actions will reduce the inflation peak in 2022’s first half. However, they could boost prices later.

Credit Agricole analysts (OTC:), said Monday that a temporary drop in VAT for food would lead to increased prices. This would happen when normal taxes return. Credit Agricole also warned that there is a risk that profit-seeking companies will partially absorb this tax reduction.

($1 = 4.0090 zlotys)