Cost of Living: Why Greece’s 3% Inflation Is Raising Alarm

Worrying signs are emerging from Greece’s inflation data, pointing to continued cost-of-living pressure across the country. Harmonized inflation (HICP) stood at 3% for the whole of 2024, remaining higher than both the EU average (2.6%) and the eurozone average (2.4%). A similar picture has emerged in the first quarter of 2025, with Greece again above average, according to Eurostat figures published yesterday. Notably, prices rose by 1.8% in March compared to February—the highest monthly increase among eurozone countries.

In March, Greece recorded an inflation rate of 3.1%, while the eurozone average stood at 2.2%. A closer look at the individual categories reveals the following trends: services remain the sector with the highest annual price increase, despite a slight slowdown compared to February. The relevant index came in at 5.2% (vs. 3.4% in the eurozone), down slightly from 5.3% (vs. 3.7% in the eurozone); energy prices rose by 0.2% year-on-year in March, compared to 0.4% in February; non-energy industrial goods increased by 0.7% in March, down from 1.4% the previous month.

Core inflation—which excludes volatile food and energy prices—is estimated at 3.9% in March, down from 4.2% in February. This points to widespread price pressures across the economy. In the eurozone, core inflation also slowed to 2.4% annually, down from 2.6% in February.

According to official Eurostat figures, food prices in particular have been a driving force behind the upward trend. In March, food prices rose significantly, with the “food, alcohol, and tobacco” index increasing by 1.7% year-on-year, compared to just 0.4% in February.

Sources at Greece’s Ministry of Development note that “Greece recorded the second-lowest food inflation among eurozone countries. Based on Eurostat’s March estimate, food inflation in Greece stood at 1.7%, compared to the eurozone average of 2.9%.” However, the renewed rise in food prices remains a troubling development.

All of the above developments are cause for concern, especially in the context of the Trump tariff era. Many economists fear these new U.S. trade policies could lead to stagflation—a mix of stagnant growth and high inflation. Should that scenario materialize, Greece may be particularly vulnerable, starting from a weaker economic baseline.

Not coincidentally, the Bank of Greece has revised its inflation forecast upward, now projecting 2.9% for 2025 (up from 2.5%). This implies that price pressures will be stronger than previously expected. According to the new central bank forecast, inflation will decline to 2.3% in 2026 (still above the ECB’s 2% target), and it is projected to rise again to 2.5% in 2027.

These projections are based on current conditions—further developments related to tariffs could worsen the outlook.

Core inflation (excluding volatile energy and food prices) is expected to fall to 2.2% by 2027, driven primarily by a decline in inflation for non-energy industrial goods, and to a lesser extent, for services.

However, the structural inflation rate is forecast to remain at 3.6% in both 2024 and 2025, only falling to 2.8% in 2026—highlighting the persistent nature of inflation in the Greek economy.

Source: Tovima.com