Prices lower, but households still struggling

By Sotiris Nikas

The prices of basic commodities may be lower than in other European Union countries, but the cost of living in Greece remains higher. That was the conclusion of the National Confederation of Hellenic Commerce (ESEE) after studying the findings of a four-month survey by the Research Institute of Retail Consumer Goods (IELKA) on household purchases in Greece in comparison with the United Kingdom, France and Spain.

The survey found that Greece is the cheapest among the four countries in terms of the prices of commonly purchased supermarket goods. The contents of the average shopping basket in Greece add up to 38.93 euros with value-added tax included and 33.54 euros without. In Spain the same basket costs 0.26 percent more with VAT and 5.84 percent more without. In France it is 24.95 percent and 32.36 percent more expensive, while in the UK the same two figures are 30.45 percent and 40.37 percent higher respectively.

“It is clear that this conclusion in terms of cost is beyond a doubt,” an ESEE statement said this week, adding that, “nevertheless, deducing that the lower prices mean a higher living standard would be a hurried and misleading conclusion, as other factors must also be taken into account.”

It stressed that “only by examining the data along with the level of salaries in Greece in comparison with the other countries in the survey can the household shopping basket be properly analyzed and interpreted.”

For this reason, ESEE provides data on the lowest and average monthly salaries in all of the surveyed countries: In Greece, according to Eurostat, the minimum salary in January stood at 684 euros, against 753 euros in Spain, 1,445 euros in France and 1,217 euros in the UK. The average salary amounted to 818 euros in Greece, 2,019 euros in Spain, 2,651 euros in France and 2,504 euros in the UK.

“What really matters is not the absolute figure of the average cost of the shopping basket, but the comparison of the basket’s cost with each country’s average salary, the so-called relative basket cost,” explained ESEE. The confederation suggested that the recession and the fiscal adjustment in Greece have led to great salary reductions in this country, “so people’s capacity to buy an average basket of items has been seriously damaged.”

ESEE also noted that the difficulty in buying a typical basket of products in Greece – as the share of the minimum salary required for its purchase is larger – becomes greater when considering the fact that the VAT on food and other basic goods is considerably higher in Greece than in all of the other surveyed countries. For instance, Greece has VAT rates of 13 percent on non-alcoholic drinks and 23 percent on fruit juice, against 10 percent and 5.5 percent in France, 10 percent and 4 percent in Spain, and 0 percent for both in the UK.

“Consequently the slightly lower average cost of the basket of basic commodities in Greece cannot counterbalance the far lower minimum and average salaries in the economy, as households in Greece must spend a greater share of their revenues on the purchase of the same basket of items compared with those in the other countries in the survey,” ESEE commented on the findings of the IELKA survey.

Taking this conclusion into account, the confederation stated that “it goes without saying that the declining course of salaries in Greece has to stop for consumption to recover.”