New brake on inflation in Greece and the Eurozone – New record food inflation

By Chrysostomos Tsoufis

Fourth consecutive month of slowing inflation in the eurozone according to the first estimates announced by Eurostat for January. Inflation in the euro zone fell to 8.5% from 9.2% in December.

Fourth consecutive month of de-escalation for Greece as wellas since September inflation has only been declining. The first estimate is 7.2% where is the 6th lowest price among 19 countries for which data are available. Only Spain, France, Cyprus, Luxembourg and Malta have lower inflation than our country. From the high of the year in September when inflation stood at 12.1% there is a decrease of almost 5 points.

Spain and Luxembourg share the lead with the lowest inflation at 5.8%. The Baltic countries, Latvia, Lithuania and Estonia remain champions. The continued decline in inflation means that 12 of the 19 countries measured now have single-digit inflation.

Falling inflation is naturally related to falling energy inflation. Energy inflation was found in January at 17.2% below and from December 2021 even in November 2021, 3 and 4 months before the Russian invasion of Ukraine. An expected fact as in the second half of December a rapid de-escalation was observed in the price of natural gas which started the month close to €80/Mwh and even traded at €50 close to 50% while oil throughout the January moved between $82-88/barrel.

Especially though things remain worrying in the food sector where inflation is rising month by month breaking one record after another. From 13.8 in December, it also broke the 14% barrier in January with a record 14.1%. A record also for structural inflation – which excludes food and energy – which reached 7%. Inflation in services fell slightly to 4.2% from 4.4%.

The brake on inflation does not mean in any case that the ECB will stop them interest rate increases. Equally, Frankfurt is expected to announce tomorrow Thursday another increase in interest rates probably by 50 basis points as the central bank is particularly concerned about the course of the food indices.

In Greece, the defense against food price increases in the coming months will be set up with the “household basket” which has passed its 13th week and the so-called market pass for which the platform is expected to be put into operation in the next 10 days, subsidizing 10% of household purchases.

The combination of the 2 measures according to the leadership of the Ministry of Development will give the consumer pre-war prices. At the end of February, the government will also have an idea of ​​the amount of fiscal space that has been created in order to proceed with additional interventions to support incomes, while from April 1st, the support for the 3rd increase in the minimum wage will also come.

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