The purely external nature of inflationary pressures facing the eurozone, including Greece, is revealed by the latest data from the European Central Bank and Eurostat.
As Fabio Panetta, a member of the ECB ‘s Executive and Governing Council, said yesterday in Paris, about 80% of inflation recorded in monetary union in October was a reflection of pressures from outside Europe, as the Old Continent imports much of its energy. and the raw materials it uses.
In particular, according to the statistics presented by Mr. Panetta at the University of Sciences Po, the price increases faced by consumers since the beginning of 2021 are due almost entirely to goods whose production is linked to imported components, such as energy.
The energy was responsible for more than half the rise in inflation in the eurozone last month, 2.21 from 4.1%, which is a record share in the history of the single currency. This is despite the fact that energy consumption accounts for 9.5% of household expenditure, according to Eurostat tables.
On the contrary, ECB data show that goods produced mainly in Europe are almost unchanged in the price trend this year, which means that they do not play a significant role in the upward trend in inflation.
This situation is exacerbated by the difficulties encountered in the global supply chain, which result in delays in the delivery of imported materials needed by European industries, but also an increase in production costs. Another inflationary factor is the limited investment on a global scale in the midst of a pandemic, which means that production is recovering slowly relative to demand after the lockdown was lifted.
Greece had the third lowest inflation in the eurozone and the wider EU in October, 2.8%. However, like all European countries, it is affected by price increases.
In this context, the government has taken a number of measures to protect disposable household income from the effects of inflation, with particular emphasis on the critical energy factor. Among other things, it has introduced a subsidy for electricity bills for low voltage, has secured a reduction in gas bills and has strengthened the dossier for the heating allowance.
The ECB’s position is that inflationary pressures are temporary, as a result of the energy crisis and the sharp recovery of the economies after the recession caused by the prolonged lockdowns, and will begin to subside by 2022. The Eurobank has inflation targeting 2 %.
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