ECONOMY

High vegetable, fuel prices send inflation up to 4.3 pct

Higher fuel and vegetable prices sent the February consumer price index soaring to 4.3 percent after a drop to 3.1 percent in the previous month, the National Statistics Service (NSS) said yesterday. Economists said the inflation jump was higher than expected, but said the uptick could prove to be the peak for the year, with a slowdown projected for the coming months. Of greater concern was the spike in harmonized annual inflation in February to 4.2 percent. The figures released yesterday were 1.9 percentage points higher than the 2.3 percent estimated for the eurozone. It was also significantly above the 3.3 percent recorded in the preceding month. Greece’s above-average growth and one-off factors like bad weather meant Greece’s inflation rate has persistently outpaced the majority of eurozone members in recent years. Structural rigidities have also been cited as one of the contributing factors. Platon Monokroussos of EFG Eurobank said the consumer price uptick came in well above market expectations of a 4 percent jump, with fresh produce prices rocketing up as a result of bad weather. Rising oil prices, spurred on by geopolitical uncertainties, were the other culprit. Oil has gained 18 percent since mid-December. The last time consumer prices rose this high was in January last year, when a cold spell sent fresh produce prices soaring and inflation escalating to 4.4 percent. «Higher fuel and energy prices were principally responsible for the inflation spike, with both contributing one percentage point to the consumer price index. Excluding these two, February inflation would have remain flat at the previous month’s level,» Monokroussos said. To emphasize the point, he cited unchanged core inflation in February, which does not include energy and fresh produce components. Vegetables were 21 percent month-on-month more expensive in February, NSS data showed. Heating oil and petrol prices increased 8.5 percent and 3.5 percent respectively. Fuel prices on a year-on-year basis gained 14.5 percent. Echoing Economy and Finance Minister Nikos Christodoulakis, Alpha Bank economist Dimitrios Maroulis said the February spike was «absolutely circumstantial.» «Fruit and vegetables are expected to be cheaper in the coming months, so they won’t have such a strong impact,» he said. Eurobank’s Monokroussos sees a respite this month, with inflation falling back to around 4 percent before a more pronounced deceleration kicks in next month. «However, it depends on geopolitical issues,» he said. A war in Iraq could send oil prices sky high and estimates astray. The February uptick notwithstanding, Maroulis said he’s maintaining an average inflation forecast of 2.9-3 percent for this year against an official target of 2.5-3 percent.