Inflation eases to 1 pct in April

NSS chief Manolis Kontopyrakis sees further deceleration on the cards for price index in May on lower food costs

Consumer inflation hit its lowest in nearly 41 years by slowing to 1.0 percent year-on-year in April, as food, car and energy prices fell with a further deceleration expected in the price index this month, data showed yesterday.

Data released by the National Statistics Service (NSS) indicated that inflation in April decelerated for the ninth consecutive month to reach its lowest reading since September 1968, down from the figure of 1.3 percent year-on-year recorded in March.

“The consumer price index in May is expected to fall further by at least 0.3 percentage points because of the drop in milk and other food prices,” said NSS chief Manolis Kontopyrakis.

“In the first four months of 2009, inflation averaged 1.43 percent versus 4.25 percent in the same period of 2008,” he added.

Heating oil plummeted at an annual rate of 36 percent, while the prices of fresh potatoes and olive oil decelerated 3.7 and 5.1 percent respectively. Car prices dropped off 7.8 percent year-on-year.

“This reinforces our view that the increase in consumer prices will continue to ease at least until mid-2009, mainly driven by lower energy and commodity prices compared to their level last year,” Diego Iscaro, economist at IHS Global Insight told Reuters.

“Furthermore, significantly weaker activity levels will help to dilute underlying inflationary pressures. All in all, we expect consumer price inflation to average 1.3 percent in 2009 as a whole,” he added.

The global financial crisis may push Greece into its first contraction in 15 years this year as the slowdown hurts demand and saps consumer spending.

Europe’s inflation rate is also at a record low, a fact which is fueling concern about the risk of deflation. Inflation in the 16-nation eurozone was steady at 0.6 percent in April, according to Eurostat, the European Union’s statistical service.