Inflation hits a decade high

Inflation in Greece reached a 10-year high in October, amounting to 3.4% year-on-year, the Hellenic Statistical Authority (ELSTAT) showed on Wednesday, mainly due to doubling of natural gas rates and hikes in fuel and food prices – the latter is expected to pile the pressure on vulnerable households that need to spend most of their budget on food purchases.

According to the data released, the price of natural gas has risen 132.3% in a year and heating oil has become 45.9% more expensive. The cost of vehicle fuel has grown 22.3% and electricity by 18.9%.

There are now major hikes in food prices too: Olive oil and vegetables posted respective price increases of 22.1% and 9.3% last month, continuing their rising streak; they are now being joined on their price trajectory by potatoes (9.1%), bread (3.9%), poultry (8.5%) and fish (7.9%). In total, the “Food and Non-Alcoholic Beverages” category showed a 3% price increase compared to October 2020.

Worse, despite original estimates that the consumer price index would decline toward the end of the year, all signs point to the exact opposite. According to representatives of major supermarket chains, consumer prices have not yet incorporated the hikes included in suppliers’ price lists; that is now expected by the end of the year. Furthermore, some enterprises that have not yet raised their prices because they had stocks of raw materials bought cheaper will implement price hikes next year.

The last time inflation was above 3% in Greece was in October 2011. After that, the consumer price index saw a steady decline and in 2013 the economy entered a period of deflation that lasted up until 2016. The consumer price index slipped into negative territory in April 2020 for a year, because of the pandemic.

International news leaves little room for optimism. While natural gas rates have started declining, thanks to the change in Moscow’s supply policy, that is not the case for the global rates of a series of raw materials essential for food products.