Greek inflation evaporated in January, hitting its lowest level since data began in 1996, the national statistics service (ELSTAT) said on Friday, as the country’s economic downturn sapped consumer price pressures.
The EU-harmonised consumer inflation rate (HCPI) was 0.0 percent year-on-year in January, ELSTAT said, below a 0.2 percent forecast in a Reuters poll of economists.
“The disinflation process continues as the pass-through from wage adjustments is strengthening and domestic demand remains under pressure,» said Eurobank economist Platon Monokroussos.
“I would not exclude negative CPI inflation readings in the following months, although recent electricity price increases may temporarily constrain the adjustment in consumer prices,» he said.
Five years of austerity-driven recession have brought Greek price rises to a halt after a debt-fuelled boom since the country joined the euro in 2001 led inflation to accelerate at almost twice the average euro-area pace.
Cuts in public sector pay and pensions have contributed to an internal devaluation process aimed at making the 195 billion euro economy more competitive.
In 2012, Greece’s HCPI rate dropped below the euro zone average for the first time since Athens joined the euro. The government and the EU expect Greece to be in deflation territory this year with the HCPI rate dropping to -0.8 percent.
Greece’s economy is expected to shrink again this year, by 4.5 percent, bringing total GDP contraction since the recession began to almost a quarter. Households’ real disposable income over the past three years has shrunk by almost a third.
Unemployment has climbed to an all-time record of 27 percent, the highest in the 17-nation euro zone, also dampening price pressures.