Inflation seen to be easing

Inflation in the first month of the year is showing clear signs of climbing down from last year’s lofty peaks, the Greek finance minister said yesterday. «There is a perceptible slowdown in January inflation,» Nikos Christodoulakis said. Economists said consumer prices are expected to ease this month as a result of favorable base effects relating to the euro changeover last year and the unexpected cold spell at the beginning of 2002, which had jacked up inflation in January to a year-high of 4.4 percent. Greece’s above-average growth, however, also contributed to high consumer prices. Headline inflation last year averaged out at 3.5 percent and 12-month average harmonized inflation came in at 3.9 percent, significantly above the European Central Bank’s 2 percent ceiling. Greece is targeting average inflation of 2.5 percent this year. Christodoulakis said the government intends to go ahead with plans to get businesses to price their products in euros and cents despite opposition from firms. Calling it a measure to combat inflation, he said pricing products only in euros «creates a psychology leading to prices being rounded up.» It also makes consumers indifferent to the smaller denominations. The euro switchover last year is estimated to have added 0.2 percentage points to inflation. ECB President Wim Duisenburg earlier this month acknowledged for the first time the inflationary impact resulting from the adoption of the single currency. The National Confederation of Hellenic Commerce said the pricing proposal is costly, difficult to implement and would pose problems for tourists visiting the country. It said the measure also underestimates Greeks’ level of intelligence.

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