Inflation set to surpass 7%

The soaring prices are strongly reminiscent of the 1980s, analysts point out, following the announcement on Monday of the 48.8% increase in the industrial producer price index in April on an annual basis.

Inflation projections for 2022 as a whole are constantly being revised upward, and analysts now put it between 7% and 9%. Just a month ago, in its spring estimates, the government forecast a 6.3% rate for the European Union-harmonized index – which is typically lower than the national index. On Tuesday the European Commission will issue its own estimates on the May readings, which are certain to stay high as the industrial index also shows.

National Bank’s chief economist Nikos Magginas noted the spread of inflationary pressures across the entire range of production, packaging, transport, raw materials etc. While the government is attempting to rein in the situation with its interventions in electricity rates, the pressure persists, he commented.

“For the first time inflationary projections exceed the long-term target of 2%,” said Magginas, adding that he couldn’t see this year’s average rate dropping below 7%, despite the government measures that should contain it by 1-1.5 percentage points. He considers the forecast that oil rates could soar to $120 per barrel particularly worrying.

Piraeus Bank chief economist Ilias Lekkos sees inflation approaching 9% this year, before dropping to 2% in 2023 – though only if there is a solution on the war and food fronts.

On the bright side, the inflationary pressures are not generating concern regarding gross domestic product, as indexes remain at satisfactory levels, with the 2021 momentum being sustained in the first few months of 2022 and tourism reaching up to the record figures observed in 2019.

Hellenic Statistical Authority (ELSTAT) data showed on Monday that the soaring industrial producer prices are generated by the 50.9% rise in external market rates and the 48.1% increase in domestic market prices.