Of Tasos Dasopoulos
The General Consumer Price Index sets a target for a new high for February, as new increases in fuel prices are added to the range of foods on which they first appeared in January.
Based on the data available to YPOIK, the increases in January were a first wave, which will be followed by a second, depending on the rate at which stocks in each species will be depleted.
Foods such as meat, fresh fish, fresh fruits and vegetables, bread and cereals, olive oil and other edible vegetable oils had much higher than average inflation in January. of the month, which reached 6.2%, when the harmonized index of consumer prices had reached 5.5%.
These increases are expected to continue in February and in the coming months, as the war in Ukraine has come to exacerbate energy and food inflation. The co-responsible Ministries of Finance, Development and Energy continue to subsidize and seek new measures to support households and businesses.
Having completely ruled out the possibility of reducing indirect taxes on food and fuel, the Ministry of Finance believes that subsidies on electricity and gas tariffs, which have the largest increases, will continue to play a balancing role in the general rise in prices.
The subsidies will be de facto higher from March onwards as they will be called upon to cover the consistently higher energy prices due to the war in Ukraine. The problem is that the account from the auctions of the pollution rights will become a deficit from April.
That is, the proceeds from the auctions will be less than the money required for the subsidies. Therefore, the budget should also help.
To avoid the possibility, the Prime Minister and the Minister of Energy have submitted a proposal for a joint European account to cover pollution with funds of 100 billion euros from EIB loans. Acceptance of the proposal would be life-saving to ensure budgetary targets.
The Ministry of Development, in turn, has announced that it will promote with a ceiling amendment to the profit margin for bread and fuel. Although it is in the right direction, this move will be more aimed at tackling profiteering. If conditions remain the same, imported inflation will continue to drive up food and fuel prices.
De-escalation in the second half
According to ELSTAT, the General Consumer Price Index for the whole of 2021 reached 5.1% from -2.3% in 2020 with price increases mainly on fuels that began to appear gradually from the middle of the previous year.
Based on this year’s situation, inflation is expected to follow the opposite course. In the first half, we will have a steady increase that will be triggered in addition to fuel, the prices of which will continue to rise after the war in Ukraine and in food.
This is given that we will have “war” inflation from cereals as imports of cereals from Russia and Ukraine, cover 30% of the annual needs of the country.
In the second half of the year, prices were expected to gradually escalate due to the base effect. That is, comparing the price increases with the prices of 2021 that had started to go uphill. If we now come to talk instead of de-escalation, of less high inflation, it will depend on developments on the war front, and the general international situation.
Source: Capital
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