Why are food prices so high in Greece?

Soaring prices, a global phenomenon, can be largely imported into Greece due to its heavy dependence on imported energy and raw materials. But that’s not the only reason why the prices of basic commodities in the country have skyrocketed.

There are a number of factors behind this pervasive rise in prices, ranging from energy and fertilizer costs in agriculture to the prevalence of special offers in supermarkets.

One reason, among the most obvious, is the high indirect taxation: excise duties, value-added tax, and a special consumption tax, such as the one introduced just a few years ago on coffee, were increased or created during the ten-year financial crisis, but have remained in place ever since.

In addition, if in Spain basic food products such as milk, bread, eggs and cheese are subject to VAT at a rate of 4%, then in Greece it is 13%.

Any talk of VAT cuts in Greece, at least for basic food products, is halted before it even starts, despite constant calls to the government from suppliers and retailers. The government says it will not impose cuts, fearing that they will not affect consumer prices.

Instead, the government proposed discussing a “gentlemen’s agreement” with industry and retailers to contain prices, a practice that has proven ineffective.

Greece also has a number of features that make prices higher than in the rest of the Eurozone. As Stefanos Komninos, market analyst and co-founder of the consultancy Netrino, explains, “Even clover fields in Greece require energy to irrigate them, while in central and northern Europe this is not necessary due to weather conditions.”

Another structural problem in Greece stems from accusations repeated last week by milk company Kri Kri, with its director talking about artificial shortages and speculative gambling on raw materials.

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