The government is concerned about high inflation and is prepared to use «all means» to put pressure on producers, retailers and service providers to keep prices low. Prime Minister Costas Simitis yesterday held two meetings to discuss the persistence of inflation: one with Bank of Greece Governor Nicholas Garganas and the other with Development Minister Akis Tsochadzopoulos. Also present at the latter meeting were Tsochadzopoulos’s deputies, Kimon Koulouris and Dimitrios Georgakopoulos; Michalis Chrysochoidis, the newly elected general secretary of the ruling PASOK party, and Simitis’s top economic adviser, Ghikas Hardouvelis. Chrysochoidis’s presence at the second meeting is a sign that the government is seriously concerned about the political impact of inflation during a period not far from national elections. Elections must take place by May 2004 at the latest, and PASOK is trailing conservative New Democracy in the polls. Garganas told reporters that inflation, currently running at an annual pace of 3.8 percent, would average 3.5 percent for the entire year. He added that he had briefed Simitis about several economic indicators and that he considered inflation the economy’s «major problem.» Garganas said inflation was the result of both high economic growth and rising labor costs. Greece’s economy grew at a 4 percent annual pace in the first half of the year, while most of the other European economies nearly stagnated. A series of factors, such as rising investment, inflows of EU funds and the construction of several major infrastructure projects, some related to the 2004 Athens Olympics, are expected to keep growth high. Garganas has often warned against rising labor costs, drawing the ire of unionists. He reiterated his views yesterday, saying that there were two ways to contain labor costs: either by improving productivity or by keeping wage rises in line with productivity rises. The Ministry of Development plans to pressure for lower prices, not only in volatile fruit and vegetables but also in services, such as at hotels and restaurants, and in insurance and private healthcare. «The fight against profiteering and high prices is a political priority,» Tsochadzopoulos told reporters after his two-hour meeting with Simitis. He promised a series of interventions that would make it easier to monitor prices of foods «from the production stage onward» and would help consumers. A Consumers’ Advocate, an office similar to the Citizens’ Advocate, or Ombudsman, would be created to respond quickly to consumer complaints about inflated prices. The government is keen to keep prices low for another reason: It is now high season for tourism and it wants to crack down on instances of profiteering that hurt Greece’s image abroad. Price and services monitoring will be strengthened and conducted by the Tourist Police, the financial crimes squad (SDOE) and officials from the Finance Ministry and the general secretariat for trade. Monitoring will focus on widely consumed products, such as bottled water. Recently, the government reimposed the mandatory inscription of a recommended price in water bottles and soft-drink cans. However, the Association of Food Industries has objected to the measure. Its officials told a visiting Koulouris on Monday that mandatory pricing distorts competition and that they plan to petition the Council of State.