Inflation is stifling the economy, undermining competitiveness and causing grave concerns in the government, prompting National Economy and Finance Minister Nikos Christodoulakis yesterday to urge businesses and citizens to fight it.

«In our country we saw some features of the Greek economy which are not compatible with European developments,» he said after a 90-minute meeting with Prime Minister Costas Simitis, whom he briefed on the budget debate which begins tomorrow. «The problem of inflation is gradually shaping a situation which is neither good for the competitiveness of Greek products or services nor a positive contribution to the yield on Greek depositors' savings,» he said.

High inflation has resulted in negative yields for small investors. Christodoulakis discussed this yesterday with the chairmen of commercial banks. «Banks will increase their offering of five- and 10-year government bonds to retail investors,» he said. Banks could attract retail interest either by selling government bonds on their own or linking them to their own products, he said.

Greece's strength in 2003 is the funds that it expects from the EU and the intensive construction work for the 2004 Olympics. The high (3.8 percent of GDP) growth rate in 2002 «constitutes the greatest guarantee for a positive course in the coming year,» Christodoulakis said after his meeting with Simitis.

Inflation in November was running at 3.6 percent, down from 3.7 percent in October. The central bank has forecast an average of 3.6 percent for 2002 and called for structural reforms.