BoG to warn on ‘greedflation’
The Bank of Greece is preparing to sound the alarm on the issue of prices, presenting a study that will highlight the reasons why Greece is more expensive than its peers in a range of products, including supermarket items.
Its governor, Yannis Stournaras, appears convinced that a key reason is the oligopolistic structure of the market, which stems from barriers to entry such as bureaucracy, a slow justice system, an inefficient state, etc. The oligopolistic structure concerns both internal competition and the entry of foreign multinationals. “With such large profit margins, why don’t more foreign multinationals come to invest in Greece?” he comments. Small market size is a factor but it doesn’t explain everything.
He also believes that the large shadow economy also plays a role in the rise in prices. With 40 billion euros of undeclared income, as he tells his interlocutors, demand certainly grows, pushing prices up.
A third parameter is the preference of Greek consumers toward branded products, which “whet the appetite” of producers and retailers alike for greater profit margins. It is no coincidence that “greedflation” cases have risen recently.
