Rising raw material costs and shipping fares are pressuring the economy

“Choking pressures have already begun to affect the Greek economy due to the jump in international stock prices of raw materials and finished products and services, which in combination with the unrealistic increase of 525% in shipping fares for container transport, cause insurmountable problems to the Greek export and import companies, and end up hurting consumers “.

This was emphasized by the president of the Central Union of Chambers and Commercial and Industrial Chamber of Athens, Konstantinos Michalos after Chamber research on the course of international prices in a wide range of raw materials related to the production of basic products in the fields of food, energy, transport, construction, etc. .

Within a year, as the president notes, international product prices have risen in double digits.

He also mentioned the following:

Indicatively, heating oil has increased by 37.94%, gasoline by 52.14%, soybeans by 17.10%, coffee by 26.59%, milk by 20.06%, corn by 35, 64%, poultry by 16.64%, wool by 12.72%, copper by 33.19%, aluminum by 26.54% etc.

Shipping fare increase by 525%

In this explosive mix of increases, businesses as a whole, both in exports and imports, have to deal with the skyrocketing cost of shipping, which from Asia to Europe has risen by 525% in the last year, as transportation for a container now costs more than $ 10,000 when about a year ago its price was well below $ 2,000.

These inflationary trends make imports of raw materials and finished products to Greece prohibitive, as a large number of Greek companies can not afford such costs, while  it is impossible for the same businesses to absorb these rising prices. And of course, given the current economic situation of consumers, it is extremely difficult to avoid further contraction of purchasing power, putting the Greek economy in a new vicious cycle of recessionary pressures.

It is certain that the combination of the strong upward trends of the index with low incomes and zero interest rates is a time bomb on the Greek market, threatening businesses and consumers.

Unfortunately, the options available are limited and extremely difficult and the Greek government should be prepared to face the coming tsunami of problems, given the country’s fiscal situation, but also the attitude of financial institutions over time, keeping liquidity taps for the market closed .

It is necessary to find the golden rule so that this inflationary period can be addressed with a limited increase in interest rates not only in Greece, but also globally, and at the same time to explore the possibilities for a prudent fiscal policy to increase consumer incomes, and to prevent the expected dramatic reduction in purchasing transactions.

In any case, the Greek government should solve the riddle of business support, as long as these pressures continue, with liquidity injections and continue to support employees in order to ensure the continuation of business activity and ensure social cohesion.