By Tasos Dasopoulos
April and May will be a two-month fire for inflation, with the rate of price increase peaking before it starts to de-escalate from June, when the 3.2 billion euro intervention in the electricity tariffs announced on Thursday will begin. Prime Minister.
Regarding April in particular, the harbinger of a new rise in the national consumer price index was Eurostat’s estimate of “Euroinflation”, ie the harmonized index of consumer prices, which reached 9.4% for Greece from 8%. it was in March.
The result that ELSTAT will announce tomorrow will be shaped by the individual increases in energy products and mainly in electricity tariffs, but also food. In fact, based on the measurements of both the Ministry of Finance and the Ministry of Development, food is following a steady upward trajectory.
The increase in April compared to March is a given despite the fact that electricity and gas consumption fell, especially in urban areas (which are the most densely populated) due to improving weather conditions.
New increases in May
May will also be a difficult month. The 50% subsidy for total electricity consumption included in the 3.2 billion euro package will limit the increases in electricity bills. However, new increases in food are expected for this month, both raw and processed.
After the Easter holidays the stocks of the big food chains in packaged food have been depleted and will be replaced with products at a higher price. Large increases in prices of 10% are also expected in fresh foods (meat, fresh vegetables, fruits). Increases of more than 15% are expected in both cereals, both partially processed (ie flour) and finished products (bread, sweet cereals for breakfast) due to the continuation of the war in Ukraine.
The price level
The great concern of the financial staff, however, is not so much the rise of the general index. The consumer price index will begin to de-escalate from next month, when this year’s high prices of food and fuel will begin to be compared with the increased prices of 2021.
The biggest threat to the real economy is the high level of prices. In other words, if inflation starts to “technically” de-escalate, but fuel and food prices remain high, then the pressure on households and businesses will continue with consequences for private consumption, public investment (especially large infrastructure projects) and exports, as companies are no longer able to absorb imported inflation.
With the significant intervention in their electricity tariffs, it is estimated that from June, in addition to mitigating a large expense that is the cost of electricity, there will be a small real de-escalation of prices, which will further reduce the inflation rate up to 1%.
Source: Capital
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