Inflation drops to below 10% in October

Greece’s European-Union harmonized inflation rate dropped below 10% in October for the first time in six months, as according to provisional estimates by Eurostat it amounted to 9.8%

This development is directly linked to lower prices for energy products, natural gas, electricity and liquid fuels, with subsidies for the first two playing a key role. In addition, Greece is one of only three countries in the eurozone – the other two being Estonia and Malta – whose harmonized index of consumer prices also fell on a monthly basis, by 1%.

Although of course the de-escalation of inflation has prompted moderate optimism in households, as well as the Finance Ministry, it does not allow for complacency or celebrations. Firstly, because inflation is still at very high levels; secondly, because there are expected to be delayed increases in the final prices of products and services; and thirdly, and most importantly, the fluid geopolitical situation can trigger a new wave of price hikes at any time.

A typical example was Monday’s rise in the prices of wheat and corn on international commodity exchanges, after Russia’s decision to withdraw from the agreement that allowed grain exports from Ukraine via the Black Sea. Even the price of palm oil, a key ingredient in the food industry, rose in Malaysia on fears of a new crackdown on sunflower oil exports from Ukraine. The new rise in grain prices and especially its duration will cause a new wave of price increases in flour and by extension in a range of foods, to say nothing about animal feed, leading to increases in dairy products and meat.

With the harmonized consumer price index at 9.8% in October, that broke the streak of double-digit inflation that began in May, when it climbed to 10.5% from 9.1% in April and continued to 11.6% in June, 11.3% in July, 11.2% in August and 12.1% in September. It is also worth noting that at 9.8%, Greece now has inflation below the eurozone average, which in October set a new historical high of 10.7%. In fact, Greece has the 12th highest inflation in the eurozone.

Energy inflation in Greece in October 2022 was 20.8%, the third lowest for the 10 eurozone countries for which data are available, while in the eurozone it was twice that, at 41.9%.