2022 Gone, Accuracy Remains: The ‘Champions’ of Revaluations – What’s Coming in 2023

Up to 44.88% more expensive we pay for food and groceries in general compared to the beginning of 2022, with the phenomenon of price increases being universal. In a total of 64 products of this group measured by Hellenic Statistical Authority (ELSTAT)a lower price in November 2022 compared to January 2022, i.e. before the start of the war in Ukraine which intensified the inflationary pressures that had appeared since mid-2021, is recorded in only one, namely fresh fish , by 5.10%.

New revaluations in 2023

The worst part, however, is probably that the end of 2022 does not mean the end of revaluations. The new year does not come with… gifts, as the well-known song “Old Time Gone” says, but with further price increases in a range of basic products, food and non-food. New price lists have already been sent to supermarket chains, predicting price increases on hundreds of products, which, according to senior industry executives, could be as much as 40%. In their majority, the new price lists with increased prices come from multinational companies and mainly concern detergents, household cleaners, shampoos, pasta, stationery, pulses, soft drinks.

These are either price increases due to consistently high production costs or, above all, delayed pass-through of the increase in production costs to the retail price, as suppliers had previously chosen to contain them in an effort to maintain market shares. According to “K” information from the supermarket industry, the new price lists include, among other things, price increases in detergents up to 40%, in pasta up to 30%, in house cleaners up to 18%, in soft drinks up to 10%, in cheeses up to 15%, in yogurts up to 8%.

The maintenance of inflation at high levels in 2023 is, after all, also a basic assessment of the interim report on monetary policy published by the Bank of Greece last week. The report estimates that inflation, based on the harmonized index of consumer prices, will be 5.8% in 2023, from 9.4% which is the estimate for 2022, at higher levels than the forecast of the state budget for 2022 (5%), a forecast that was revised upwards anyway. The maintenance of inflation at high levels in 2023 is primarily related to the fact that, despite any de-escalation recorded in the prices of basic energy products, either at wholesale or retail level (also due to subsidies), they are characterized by strong uncertainty mainly due to the continuation of the war in Ukraine. If there is indeed another large increase in the prices of energy products, it is extremely doubtful whether similar amounts of subsidies will be given to consumers and businesses, especially since fiscal space is not unlimited. In addition, food price appreciations appear with a time lag compared to energy, resulting in very high food inflation. In November, although inflation eased to 8.5% from 9.1% in October, food inflation soared to 15%. Slowly but surely, the revaluations are now also affecting non-energy industrial goods and services, which will also contribute to maintaining inflation at high levels in 2023. Eurostat data.

However, as far as food and other basic supermarket items are concerned, the picture that emerges from the examination of ELSTAT’s analytical data is revealing of the burden that Greek households had from the beginning of 2022. In a total of 64 products that belong to the groups ” food and non-alcoholic beverages”, “alcoholic beverages” and “household goods”, prices in November 2022 compared to January 2022 were higher in 63 of them. Increases range from 3.25% on spirits to 44.88% on sugar. In 36 of the 63 products, the rate of increase in their prices is double-digit. These include very basic food items, such as other edible oils (seed oils) with a price increase of 36.27%, flour (26.95%), fresh milk (22.98%), yogurt (22.08 %), cheeses (21.95%), olive oil (18.63%), potatoes (15.48%).

Slow de-escalation

When will inflation return to near the 2%-3% level, a level of inflation that is considered normal and means that an economy is not in recession? It’s more like the million dollar question. TTE predicts inflation of 3.6% in 2024, while the Parliament’s Budget Office points out in its latest report that uncertainty remains regarding the speed of inflation de-escalation and the period of time it will take to return to close to the 2% level in the medium term .

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