Inflation rises steeply in July

Annual pace at 2.5%, from 1.8%, puts an end to 9 months of decline; foodstuffs jump

Inflation rises steeply in July

The annual pace of inflation jumped to 2.5% in July from 1.8% in June, independent statistics agency ELSTAT announced Thursday.

EU statistics agency Eurostat had already warned the public, when it published its own Harmoniozed Index of Consumer Prices last week. Still, the rise was steep and interrupted a nine-month drop in inflation, from 9.1% in October 2022 to 1.8% in June, due to the steep decline in electricity and natural gas prices, down 16.2% and 68.9% year-on-year, respectively.

Inflation is being boosted by food prices, running at a 12.3% annual pace in July, with some items having risen as much as 28% since the beginning of the year. In July alone, some foodstuffs rose as much as 6.67%. It’s not just food: Health services, dining and other catering services, whose prices had been fairly constant in 2022, have risen 7.8% and 6.2%, respectively.

And prospects are not getting better. Early August trends show that the price of gasoline, already rising in July, will weigh even more heavily in August.

On a global level, the high temperatures and lengthy droughts caused by climate change hurt production. The war in Ukraine, an important producer of grains and other foodstuffs, and some countries’ blocking of exports to ensure adequate domestic food supply are putting more pressure on prices.

The Greek bakers’ association announced Tuesday that flour producers have warned them of imminent price rises of 7 to 10 percent. But it’s worth noting that, even though the price of soft wheat had so far fallen 44% from its peak, reached after Russia’s invasion of Ukraine in February 2022, the price of flour had dropped 5%.

Further price hikes are expected in olive oil, whose production in the EU is expected to drop 40% in 2023, as well as in sunflower and palm oil, both of which are heavily used in the food industry.

Compared to the end of 2022, fruit, vegetables, cereals, rice, olive oil, potatoes, eggs, cheese and pork are more expensive. In July 2023, 42 out of 60 categories of foods and beverages saw higher prices, with frozen vegetables topping the list at 6.67%. Among basic foodstuffs, pasteurized milk (5.34%), pasta (3.99%) and eggs (3.06%) also rose significantly month-to-month. 

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