Cheaper veg chops inflation
The consumer price index in February eased to 3.4 percent year-on-year, falling by a hefty 100 basis points from the previous month, as vegetable prices fell back to more normal levels, data released by the National Statistics Services (EYSE) yesterday showed. Annual harmonized inflation last month decelerated by a similar margin to 3.8 percent from 4.8 percent in January, the second highest in the eurozone. The climbdown in prices last month, larger than the consensus forecast, marks the beginning of the easing process, said Schroder Salomon Smith Barney economist Miranda Xafa. She said consumer prices will start falling this month, with the index projected at between 3.3 percent and 3.4 percent. April should see a bigger drop as a result of favorable base effects coming into play. «Inflation should fall to just below 3 percent by the end of the year, assuming there are no new developments along the energy front,» Xafa said. She also discounted earlier concerns that ongoing wage negotiations could push up inflationary pressures, noting that to date all parties involved in the discussions appeared to show moderation. EYSE’s statistics showed the unexpectedly sharp fall in February’s inflation came principally from declining vegetable and potato prices, down 19.5 percent and 2.5 percent respectively month-on-month. Prices of both food items skyrocketed in January as a result of the bad weather, sending the consumer price index in that month up to 4.4 percent. Year-on-year, vegetables and potatoes showed increases of 43.9 percent and 54.6 percent respectively. Mutton and goat meat were also cheaper by 6.1 percent on a monthly basis in February while telecoms operator OTE’s decision to rebalance its tariffs brought telephone service charges down by 2.1 percent.
