ECONOMY

November CPI eases to 2.4 pct

The consumer price index in November dropped to 2.4 percent year-on-year from 2.8 percent in the previous month, data released by the National Statistics Service (ESYE) yesterday showed, underlining the let-up in inflationary pressures due to cheaper energy prices. The sharp decline in retail prices was matched by the 0.7-percent fall in the October wholesale price index fall from the previous month, also the result of lower energy prices. Annual harmonized inflation also continued the downward trend first evident in July, easing to 2.9 percent last month from 3.2 percent in October. In common with other eurozone members, Greece is enjoying the benefits of falling energy prices. The sharp climb-down in consumer prices was one of the principal reasons why the European Central Bank decided not to trim interest rates on Thursday. Provisional figures released by Eurostat, the European Union statistical agency, late last month suggested that November annual inflation in the region will come in at 2.1 percent, close to the ECB’s 2-percent ceiling. However, with inflationary pressures easing so quickly, the central bank could decide to reinvigorate the economy with a rate reduction in January. Alpha Bank economist Dimitrios Maroulis said the fall in headline inflation was expected. He noted that the substantial decline came from the sharp drop in energy prices. ESYE statistics showed heating oil and gasoline down by 33 percent and 15.6 percent respectively, slashing 1.5 percentage points off headline inflation. Maroulis said the impact would have been bigger were it not for the spike in fruit and vegetable prices resulting from adverse weather conditions, up 16.5 percent and 14.4 percent respectively. Continued fears about «mad cow» disease also pushed up the costs of local meat. The hike in air and ship fares in the wake of the September 11 events also impacted on the November price index. While November prices benefited from the favorable base effect coming from the oil component, Greece could see an upsurge in the next two months. «We will see an unfavorable base effect in December and January as energy prices came down in these two months last year. Inflation could edge up to 2.6-2.7 percent in December,» Maroulis said. With inflationary pressures easing so quickly in the final quarter of the year, he said that the average CPI for the year is expected to come in at 3.35 percent, close to the Bank of Greece’s projected figure of slightly below 3.5 percent and above the official estimate of 3.1 percent.