Bank of Greece: Concern over inflation and food accuracy

By Chrysostomos Tsoufis

At the time when the Parliament was voting on the market pass, which is intended to relieve family budgets somewhat from the accuracy on the shelf, the Central Bank did not hide in its interim report on the economy its concern about the course of inflation and especially about the prices of food.

According to the data of the Central Bank, in the first 11 months of the year, the inflation of food items was at 9.4% (8 times higher than last year) and together with energy, they are the 2 main indicators that keep inflation high. And while in the last 2 months there has been a de-escalation in energy prices, in some food categories the upward streak has not yet come to an end. In the first 11 months of 2022, the following increases are recorded:

Bread-Cereals 13.5% from 0.7% in 2021

Dairy-Eggs 15.3% from 0.6% in 2021

Meats 12.9% from 1.3% in 2021

Oils and fats 20.6% from 6.5% in 2021

Vegetables 11.9% from 2.1% in 2021

In full agreement with the ECB, the ECB estimates that inflation is here to stay as it states that it is “beginning to acquire permanent characteristics”. In fact, he acknowledges that the forecast for inflation of 5.8% is likely to be accepted as optimistic as there are many uncertainties. These include the war in Ukraine and geopolitical tensions, the ongoing impact of the pandemic in China, supply chain problems and the food crisis in emerging economies.

Especially for food, the ECB has warned that their prices will continue to rise in the first months of 2023 before de-escalation begins, but in any case their inflation will remain higher than its historical average, at 2.3% , and in 2025.

The IMF estimated that:

For every 1 unit drop in crops, food prices increase by 8.5%
1 unit increase in fertilizer prices raises food prices by 0.45%
1 unit increase in oil boosts prices 0.2%

In the event that Russia decides to block grain exports from Ukraine again, then grain prices would increase by 10%

Unfortunately, food has become the number one source of concern for consumers. In a poll of 5,000 consumers from 10 countries published by Aarhus University in Denmark, 53% fear impending food shortages.

55% see significant increases in red meat, 52% in fish and 51% in dairy.

4 in 10 say they buy less meat and 1 in 10 no longer buy newspapers, magazines and alcohol.

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