"Increasing income is the only solution to high food prices"- Deputy Chairman of the Bank of Greece

“Increasing income is the only solution in the face of high prices that show no sign of coming down,” – Theodoros Pelagidis, deputy governor of the Bank of Greece and professor of economics at the University of Piraeus, admitted on Tuesday.

Speaking on state radio ERT, Pelagidis noted that “high prices will remain, they will continue to rise and reduce the incomes of the vast majority of citizens”. The only solution in the interests of citizens is to increase wages. “We are required to make such an adjustment in terms of wages. Because we should not expect food prices to fall. This will not happen,” – Pelagidis emphasized.

In his opinion, the high cost of living has two points of support: “On the one hand, these are wages, on the other, prices, that is, this is not only a problem of prices, but also a problem of wages.” In his opinion, the only solution to the problem of rising prices is “an increase in income that occurs due to increased investment and labor productivity.”

“In terms of pace, it may not be 4 or 5, it may be 3% or 2%, but we will not see the zero that we saw in previous years, this is clear, because there is pressure on spending on an international scale , on issues related to climate change that are also relevant in other issues,” – he noted.

He added that due to the opening of the Greek economy “Some food products, such as feta cheese and olive oil, are in international demand. Therefore, their prices are set internationally: 8 and 9 euros per kilogram can turn into 12 and 15. No one can do anything about this problem, unless not to introduce restrictions for manufacturers, which, how can I say this, is not true, it is not modern (…), the way we buy mobile phones, laptops and various similar products, imagine if other countries do the same. We will face a situation much greater overall price increases.”

“What is happening internationally is that this year and next year, in fact, there is an OECD report that will be released soon that at the moment inflation at the international level is fueled by rising wages, as managers, workers in any case they try and beg, and mostly they succeed, because the labor markets in many countries, for example in America, are tight, they receive an increase in their purchasing power, adjusted for inflation, “ – he said.

“What is required of us is that there be such an adjustment on the wage side. Because we should not expect food prices to fall. This will not happen. The growth rate can and will decline, but there is no chance that it will fall, because that in any case they are faced with international demand and with demand from countries that have increased their incomes and consume food”, – said Pelagidis. He emphasized, in particular: “The key factor is wages. That is, wage growth is productivity and investment. This is very important”.

PS The economics professor gives a classic recipe – “if you work more, you will earn more.” However, this has not been the case for a long time. Moreover, in all his words there is no main key – what to do with disproportionate budget spending? What to do with those decisions of the government of the country when politics prevails over economic expediency, which ultimately leads to crises? Most likely, the professor has answers to these questions, but voicing them is most likely a reason to lose a fairly well-paid post.

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