Why in Greece the inflation It insists even when it slows in the Eurozone, and above all, because we pay so much for services, there are two questions that torment every household who sees the salary every month ends in the middle of the month.
Classes of services such as focus, accommodation, rents and air travel, which is basically related to the tourist product of Greece, are the factors that keep the country’s inflation high, according to the monthly data published by ELSTAT and the latest report by the Governor of Greece.
Further, the problem is not only the accuracy observed in the services sector, as it diffuses throughout the economy by overall inflation levels. It is no coincidence that, although throughout the eurozone, services play an important role in rising inflation, Greece ranks 4th place between them in this part.
Throughout the eurozone, the countries with the highest weighing services are Austria, France and Spain, with Greece following the fourth, while Slovakia, Latvia and Croatia record the lowest weighing services.
Which is due to the accuracy of services in Greece
As stated in Mr Stournara’s report, the culmination of energy inflation in May 2022, large increases in food as well as problems in the supply chains during the pandemic period, are elements that were incorporated with time lag in the inflation of services while combining with a number of domestic factors.
All the services distinguished are those who are mainly related to tourism, such as accommodation services and catering services, as well as airline tickets and rents. The overall contribution of these categories to the formation of the inflation of services to 4.5%in 2023 amounted to 81%, while for 2024 to 72%.
But what are the reasons for these services to grow?
As far as catering services are concerned with accommodation providers, they are strongly reflecting:
- wage increases as a significant part of their employees are paid the minimum wage and therefore have benefited from the latest increases with the most recent one that applies from April 1st to 880 euros.
- incorporate nutritional and energy costs that has increased drastically in previous years and
- Of course, they reflect the high tourist demand, which is the “double -edged knife” of Greek development
In terms of airline tickets, which are intense volatility of their prices:
- are determined by energy cost fluctuations due to airplanes’ fuel and also
- They reflect the high tourist demand in our country.
Finally, in terms of housing rents, the BoG states that accuracy in them is mainly limited to domestic issues, although to some extent they are also linked to the availability of long -term rental, as opposed to those of short -term leases due to high tourist demand.
The Provision of the BoG for 2025 is that the inflation of services will remain high, based on wage increases, increases in indirect taxation and high demand due to increased tourism.
Salaries and in particular the minimum wage is expected to increase this year as well. At the same time, tax increases have been launched related to the climate crisis resistance, and in 2025 it is expected to be another year with increased tourism, which will maintain external demand at high levels, thus pushing prices higher.
According to the BoG’s prediction, general inflation in Greece in 2025 is expected to fall slightly to 2.9%, while structural inflation (based on services) is estimated to remain stable.