Eurobank: Housing, transport, food are the main factors for inflation in Greece

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Inflation in Greece continued for the 7th consecutive month in December 2021, with the categories of housing, transport and food and non-alcoholic beverages being the main sources of price increases, Eurobank points out in its weekly bulletin “7 Days Economy ”.

According to the bank, the annual change in the Harmonized Index of Consumer Prices (HICP) was 4.4% (+ 1.9% compared to December 2019, ie a relatively slight increase over a period of 2 years), a price corresponding to high 10.9 years.

For the whole period January-December 2021, the average HICP increased on an annual basis by 0.6% from a decrease of 1.3% in the corresponding period in 2020. This result reflects the negative annual inflation of the first half of 2021 and the positive of the 2nd half of 2021.

In the Eurozone, the annual change in the HICP in December 2021 amounted to 5.0%, slightly higher compared to the corresponding size in Greece. The positive difference between the inflation of the Eurozone and Greece has been maintained almost uninterruptedly since July 2011 until today, with the result that the loss of competitiveness in terms of consumer price index of the 2000s has been fully recovered. Nevertheless, the challenge of strengthening the other component of overall competitiveness, namely structural competitiveness, remains (eg improving the quality of institutions).

In terms of individual groups of goods and services, as noted by Eurobank, the strengthening of the housing price index stood out, as in previous months (18.8% YoY in December 2021 and 13.7% compared to December 2019), transport (7.1% YOU) and food and non-alcoholic beverages (4.3% YOU), followed by relatively milder increases in clothing and footwear, durable goods, household goods and services, hotels , cafes and restaurants and education.

Finally, in the groups of goods and services of health, other goods and services, leisure and cultural activities and communications, prices fell on an annual basis in December 2021.

Based on the above-mentioned changes and the corresponding weightings of individual goods and services in the formation of the general price index, as Eurobank emphasizes, it turns out that the rise in inflation in Greece stems mainly from the categories of housing, transport and food and non-alcoholic beverages. .

The current energy crisis, the imbalances between the demand and supply of internationally traded goods (eg food) and the base results due to negative inflation in the second half of 2020, have a direct upward effect on the prices of these groups of goods and services.

It is worth noting that the price of Brent crude oil closed at $ 77.8 / barrel at the end of December 2021 (source: Thomson Reuters Eikon), increased by 50.2% compared to December 2020 ($ 51.8 / barrel) and by 17.8% compared to December 2019 ($ 66.0 / barrel). The upward trend of Brent oil price continued in the first weeks of 2022 ($ 87.51 / barrel on 18/1/2022).

This development, at a time when heating needs are high, together with the base effect due to the annual fall in prices in the first half of 2021 (-2.1% YoY in the first quarter of 2021 and -0.6% YoY in 2nd quarter 2021), are expected to maintain inflation at high levels in the 1st quarter 2022. Possible de-escalation of the pandemic and tensions in the geopolitical field, may lead to a gradual slowdown thereafter.

Undoubtedly, according to the bank, the rise in inflation in Greece for the 7th consecutive month in December 2021 raises concerns in the economy. For the first time after many years of reduction or slight increase of the general price level, households, businesses and the government in Greece observe inflation rates above 4% in the announcements of ELSTAT.

In the household sector, inflation holds to some extent the real growth rate of their disposable income (this is expected to be recorded mainly in the 4th quarter of 2021 and the 1st quarter of 2022, and reduces a small part of the currently deflated value ( actual) of the increased deposits of the last two years.

Finally, in companies, costs follow an upward trajectory, creating risks for the level of production. According to the latest publication of ELSTAT, the index of import prices in industry increased on an annual basis by 25.0% in November 2021 from a decrease of 9.9% in November 2020.

Source From: Capital

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