Accuracy: Price increases continue. The government insists on the same recipe.

e accuracy remains high in Greece, with the government remaining an observer and proceeding to extend the same failed interventions that have been in place since last March.

In essence, the government continues to stubbornly refuse to reduce VAT on food, something that almost all parties and the market are calling for, citing examples of countries that have successfully implemented the measure.

The magnitude of the problem was also reflected in Eurostat data, which show that Greek consumers paid, for example, the most expensive milk in the European Union in 2023.

Apart from dairy products, prices of other staple foods such as oils and fats, bread and cereals are also above the European average. In fact, the huge inaccuracy is a huge problem for Greece.

More expensive coffee

At the same time, coffee has become even more expensive for those who want to enjoy it in a café. The VAT rate on served coffee, tea, cocoa, chamomile and other beverages has returned to 24% after four years when it had landed at 13% due to the pandemic. Instead, the VAT rate for coffee ordered by consumers by delivery or when they choose to take away remains permanently at 13%.

With the move of VAT from 13% to 24%, served coffee is sold 11% more expensive from 1 July.

Other Products

However, accuracy is a widespread phenomenon that affects our country. Based on ELSTAT data for May, in one year there have been new revaluations in: Meat - general (1.9%), Fresh Fish (12.5%), Olive Oil (56.8%), Fruits - general (1.7%), Vegetables - general (1.2%), Sugar - chocolates - sweets - ice cream (2,3%), Mineral water - soft drinks - fruit juices (7,7%) and Alcoholic beverages - non-service (3,5%).

Meanwhile, clothing and footwear recorded 6.4% appreciation in May, while wage earners and pensioners are «cutting back» wherever they can to make ends meet for the month, with their income running out in the first 15 days.

Revaluations continue

It is worth noting that according to the most recent Eurostat data, inflation in Greece remained stuck at 2.4% in June, which shows that appreciation continues at all levels, raising concerns ahead of the difficult continuation of inflation.

According to the annual survey of the GSEE Labour Institute on the economy and employment, under the ND government, the real income of employees from their work fell by almost 9% - the largest decline in the EU. Moreover, more than a third of households (36%) are barely making ends meet, while the real average hourly wage, in terms of purchasing power, is the lowest of all EU countries.

Greed inflation in Greece

Greed inflation in Greece ran at a multiple rate (5.5 times) compared to the eurozone over the last 4 years, as the latest quarterly report of the Parliamentary Budget Office, released a few days ago by its head Ioannis Tsoukalas, shows. The above figure shows that at least the competition in the Greek market is not functioning in substance, with the result that consumers are disproportionately burdened compared to other European countries, due to business profits.

In particular, the Office has analysed GDP inflation in its main components to draw conclusions on the contribution of labour costs and corporate profits to its evolution, particularly since the pandemic and war in Ukraine which exacerbated inflationary pressures. The analysis shows that profits had more than double the contribution to the cumulative increase in deflationary GDP by 2024 relative to wage costs.

According to the Bureau's report, as far as Greece is concerned, of the total inflation (GDP) increase of 16% for the reference period (Q2 2019 - Q1 2024), the primary contribution to inflation was made by profits (per unit of output) with their share amounting to 9%, while unit labour costs (reflecting wages and employer contributions) contributed 4.1% for the same period. In contrast, in the Eurozone for the same reference period the Budget Office observes that unit labour costs, as opposed to unit earnings, have a strong contribution to inflation of around 10%. At the same time, the contribution of profits in the euro area was close to 1.7%.