Inflation: Greece turns back 28 years

Double-digit inflation is taking Greece years back, in the now-distant 1994, which rising to levels above 10%. After 28 years, consumers in Greece are feeling the weight of steeply rising prices not only in electricity bills but also in basic food items. The new, recent package of interventions of 3.2 billion euros in energy is expected to keep inflation around 5%, this year.

Today, ELSTAT data for April are expected, which will take the price index to over 10%. According to official Eurostat data released last week, the harmonized consumer price index climbed to 9.4% against a performance of -1.1% in the corresponding month of 2021. In March 2022 the corresponding index shaped up at 8 %, while the consumer price index of ELSTAT was set at 8.9%.

Inflation at record levels

The sharp rise in energy prices is burning away incomes and the economic climate is being shaped by inflation at record levels. After the start of the Russian war in Ukraine, the estimates of the Ministry of Finance were revised for the worse for this year, raising the average inflation to the level of 5.6% – from 1% which was the initial forecast. The analyses show scenarios for an annual increase of even 11%, while a “black record” is striking at consumers and deflating the economic climate, with the drop being registered by the market and in indices. Inflation started to bare its teeth in January when it jumped to 6.2%, at a high level since 1997, recording a historical level from the time Greece adopted the euro. In December 2021 it rose to 5.1% from 3.4% in October and 4.8% in November.

Foundation for Economic & Industrial Research – IOBE data show that 49% of Greek households predicted a slight or significant deterioration in their financial situation, while almost half of consumers continue to predict that they will spend less or much less. In the food retail sector they are preparing for a new round of price increases, as according to price lists from suppliers more than 400 product codes have increased by 10% to 50%. Indicative are the data on the salaries of employees, who are called upon, with already reduced salaries – and high contributions and taxes – to pay extra unbearable costs.

According to the Stability Program, the Ministry of Finance predicts that inflation will rise to 5.6% this year (from a forecast of 0.8% in the budget), a year in which there will be a peak, as for next year it forecasts an increase in the consumer price index by 1.6%, while for the years 2024 and 2025 by 1.7%.