ECONOMY

Inflation eases to 3.1 pct

Headline inflation in January slowed to 3.1 percent year-on-year as favorable base effects and cheaper fresh produce blunted the impact of higher fuel prices, data released by the National Statistics Service (NSS) yesterday showed. The decline in consumer prices from 3.4 percent in December was «expected,» due in part to the massive surge in fresh produce prices last year as a result of the cold spell at the beginning of the year, said Dimitrios Maroulis, economist at Alpha Bank. Fresh vegetables and potatoes last month were cheaper by nearly a third on a yearly basis, while month-on-month price increases were slight to moderate, NSS statistics showed. Fish and meat however cost more, limiting the fall in the consumer price index. Uncertainty over a war in Iraq also sent the prices of petrol and heating oil soaring, up by 3.2 percent and 4.5 percent respectively. The inflation slowdown is expected to cushion the Greek economy from the impact of a war in Iraq, said Economy and Finance Minister Nikos Christodoulakis. «The fact that inflation fell in January will provide a better defense for the Greek economy in the coming months,» he said. The government is targeting average inflation of 2.5 to 3 percent this year, against 3.6 percent in 2002. Maroulis said consumer prices are expected to flare up to 3.3-3.4 percent this month on the back of base effects and then ease down by 0.1-0.2 percentage points in March. «April is when we should see inflation at sub-3 percent level due to favorable base effects,» he said. «A lot depends on a war in Iraq, though, as this could cause oil prices to climb.» Crude oil yesterday fell from a 26-month high as a split in NATO led some to think that the US may delay taking military action against Iraq.