Internal devaluation in Greece mainly concerns salaries and not the prices of commodities, the International Monetary Fund said in a recent report, suggesting that living in this country has become much more expensive due to the decline of incomes and increases in taxes.
“The burden of adjustment has fallen disproportionately on wage earners,” notes the IMF’s executive board report on the Greek economy published on February 6. Meanwhile, data from the European statistical service, Eurostat, for the 2008 to 2017 period reveal the pressure lower salaries have come under: Greece is the only European Union member-state with a “national minimum salary” that has been reduced in comparison with 2008, and by 14 percent at that.
Moreover, figures from the Social Security Foundation (IKA) previously presented by Kathimerini show 550,000 workers bring home an income that is below the minimum salary. At the same time the price level in Greece amounts to 85 percent of the mean rate in the European Union, while gross domestic product per capita in Purchasing Power Standards stood at just 68 percent of the EU average in 2015, down from 94 percent in 2009.
The picture in Greek households is equally bleak when we look at Actual Individual Consumption (AIC), which records the goods and services households have consumed regardless of whether this was paid for by the private or the state sector. In 2009 this index stood at 106.5 percent of the EU average, dropping to 77 percent today.
Hikes in indirect taxes have triggered price hikes on dozens of products and services, eating further into households’ incomes. In January, the Hellenic Statistical Authority (ELSTAT) recorded price rises in fruit, vegetables, olive oil, potatoes and coffee, among other commodities. The hike in coffee is outstanding, as after the imposition of a special consumption tax from January 1, a pack of 200 grams by a leading brand that cost 5.70 euros in December, now costs 6.68 euros, an increase of 18 percent.
Taxes, combined with the rise in the international oil rates, have also increased the cost of heating and transport in Greece: Heating oil in particular rose 36.8 percent in January 2017 compared to a year earlier.