The number one problem for the finance ministry is to address the issue of price inflation, as inflation may have shown signs of easing, but food price rises are continuing, shrinking the incomes of households, especially the most vulnerable who find it difficult to pay their bills and fill their supermarket baskets.
In government the alarm has been sounded, as the issue can affect the psychology of the electorate and, if not addressed, may erode the benefits of the household and business support measures of recent years.
The government has so far spent €13 billion on support measures, both against the energy crisis and to tackle the coronavirus pandemic.
Warnings of a new tsunami of revaluations
In this environment, market players are warning of a new tsunami of price increases in dozens of products.
In particular, until the end of December they will be more expensive:
- tomato juice up to 37%,
- house cleaners by 28%,
- olive oil and eggs up to 20%,
- cereals, dairy products, mustards, mayonnaise up to 16%,
- dishwasher detergent up to 15%,
- frozen potatoes and raisins up to 12%,
- halvah to 11%,
- cheese and salt up to 10%,
- breadsticks and buns up to 5%,
- chocolates 5% to 9%,
- canned mushrooms up to 8%,
- private label evaporated milk, napkins and soft drinks up to 7%,
- sausages up to 6%,
- biscuits up to 5%, and
- Nuclear power 2.5%.
The specific revaluations are essentially the third wave of price increases in 3 months.
According to market players, the new price increases will be felt by consumers gradually until the end of the year, depending on the stocks that supermarket chains have in their warehouses.
Reduction of consumption
Ongoing price rises have forced two out of three consumers to limit their purchases, to the bare essentials, even if they are basic goods such as food.
This is also evident from supermarket sales, which are increasing due to the revaluations, but in terms of consumption volume, sales are, for the most part, down.
In fact, according to data from market measurement company IRI, from the beginning of the year until the end of September unit sales of dairy products decreased by 4.6%, frozen products by 4.9%, while sales volume of detergents and cleaners decreased by 6.3%.
There are also many consumers who either choose products of lower nutritional value, or change their buying habitsto enable them to cope with the greatest precision in recent years.
New measures to support weak households
The basic will in the government camp is to support the most vulnerable households, as is the official line of the Eurogroup, in order to deal with the accuracy on the food front.
The institutions have sent a clear message to the government not to repeat horizontal measures, but to focus on the economically vulnerable.
Two scenarios will be on the table if there is sufficient fiscal space:
- The administration of a food pass for the purchase of food from supermarkets on the basis of strict income criteria.
- Or alternatively, the administration of a new accuracy check similar to the one to be given next December. It should be noted that in the week before Christmas, the 250 euro accuracy cheque is expected to be made available to around 2.3 million pensioners, uninsured elderly people and vulnerable households as an exceptional financial support. The measure will also apply to long-term unemployed people of 12 to 24 months who are not eligible for the minimum guaranteed income.
