For the first time in 28 years, inflation in Greece calculated in double digits. According to ELSTATthe national consumer price index in April was 10.2% compared to 8.9% in March, a record level since 1994.
The inflationary pressures caused by the energy crisis and the war in Ukraine have long been felt in the Greek economy and in the pockets of consumers. Rising prices for energy, raw materials and transport also lead to increased sales in supermarkets and shops. One after another, even those that did not raise prices in 2021, are now doing so as they want to ensure their continuity and at the same time reduce the pressure on profit margins.
Εθνικός ΔΤΚ, πληθωρισμός 10.2%
9.1% (Απρίλιος 2022)
National CPI, inflation 10.2% https://t.co/fFXvt7NPsp
Harmonized Index of Consumer Prices, annual increase 9.1% (April 2022) https://t.co/YzOHfQQzcu #ΕΛΣΤΑΤ #ELSTAT pic.twitter.com/pOSutiwAbH
— ELSTAT (@StatisticsGR) May 10, 2022
Scenarios until the end of 2022
The messages coming from the domestic and international market are that inflationary pressures will continue through at least 2022, which will deal a serious blow to consumer incomes and put a huge strain on business operations.
Worst of all, no one can predict the duration and intensity of the phenomenon, as everything depends on the war in Ukraine and the corresponding US sanctions against Russia. The Ministry of Finance and other departments and organizations of Greece have long revised their estimates for 2022, replacing rosy expectations with gloomy ones. In the revised stability program presented 10 days ago in Brussels by the Ministry of Finance, the baseline estimate is that average inflation for 2022 will reach 5.6% as inflationary pressures are expected to ease from the summer.
New support measures
It is expected that the package of measures announced by the Government on lower electricity prices. Finance Minister Christos Staikouras said yesterday that with the 3.2 billion euros announced last week to support households, 1.1 billion euros will come from the budget, which, after this compensation, has significantly reduced its reserves.
However, the Minister of Finance left open new fields in the future, depending on the execution of the budget. After all, according to him, the best of the planned execution of the 2021 budget, the good progress of the first four months and 39 billion euros of tax and excise taxes received, gave a margin for last week’s measures.
However, according to the publication money review, The Hellenic Ministry of Finance still keeps reserves to use them in the next period if necessary. Measures that are currently in development and could be activated include, among others, a broader housing allowance, as well as targeted reductions in VAT on basic products.
You don’t have to be an economist to see a direct link between inflation and public assistance, which is now carried out by all EU countries. Which, against the backdrop of further uncertainty with the embargo directed at Russia, promises an even greater increase in inflation and, accordingly, the devaluation of the euro.
There is an opinion that the goal of the war in Ukraine was not so much Russia as the European Union, which, due to the impact of sanctions, support for refugees and high energy prices, will lose a significant part of the economy. On the contrary, the US, by supplying gas and weapons, will be able to offset its huge $30 trillion debt.