The forecasts and hopes of YPOIK for inflation

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By Tasos Dasopoulos

From the middle of the year, YPOIK expects the stabilization of the Consumer Price Index, after the end of a year of continuous rise, mainly due to the prices of fuel and, most recently, food.

This is one of the reasons that will implement from June until the end of the year the basic intervention planned by the Government in the price of electricity. Given that the measure, which has a high budgetary cost (unless there is a European solution), is estimated to have the greatest positive impact on businesses and households. For this reason, it will be implemented in a month during which prices will begin to stabilize.

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Meanwhile, the sharp rise in inflation, which reached 8.9% in March, is expected to continue in April, with the Consumer Price Index exceeding 9%, as the rally of fuel and raw material prices continues. . In addition, the increased demand for the Easter days is expected to have a negative effect on the course of prices in April. This is because the stores will increase their stocks, with higher priced products, to serve the increased consumption of the holidays. In May, another small increase is expected, as the increased consumption of the holidays will push for the replacement of all stocks in food and other items of daily use. This, even if fuel prices, remain stable.

From June onwards, stabilization is expected which will be more “technical” than substantial. This is because, last June for the first time, the Consumer Price Index went into clear positive territory (1%) after about 10 years of negative inflation. Therefore, due to a higher price base, the rise will at least begin to stabilize on a more permanent basis with the prospect in the coming months until the end of the year to de-escalate perhaps below 4%. However, on an annual basis, the financial staff is expected to proceed with the stability program – which will be submitted at the end of the month – in a brave review of inflation from 0.8% provided for in the budget to 5.5% -6%.

The food

Food prices, as estimated by YPOIK sources, are expected to slow down more slowly, as their prices depend on the prices of raw materials and transport that remain at high levels. Also, price increases in raw foods (fresh vegetables, fruits, meat) come with a slight delay as they incorporate inflation into the raw materials used for their production.

In this direction, the Government, together with the intervention in electricity, is expected to repeat the measures that are being implemented for the first time at this time, such as the “precision check”, the subsidy on fuel and the special subsidy on diesel.

The point that still leaves the financial staff with a question mark, is the end of the war in Ukraine, which feeds inflation in the prices of fuel and food. The sooner hostilities end, the faster the uncertainty that prevails in addition to product markets and money and capital markets, which increases borrowing costs and inhibits the investment climate.

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Source: Capital

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