ECONOMY

Deflation persists for a 29th month

deflation-persists-for-a-29th-month

Deflation lingered in Greece for a 29th consecutive month in July, as the Consumer Price Index figures for the period released on Friday by the Hellenic Statistical Authority (ELSTAT) pointed to a drop in prices averaging out at 2.2 percent from a year earlier.

However, it is likely that will be the last deflationary month for now, as August has seen value-added tax hikes imposed on thousands of products and services, which will make an impact on this month’s figures.

The recent VAT changes appear in July’s index readings only in taxi fares and ferry tickets, as ELSTAT noted that the price sample was collected before the VAT hike was introduced.

The commodity group with the biggest annual price decline (7.4 percent) last month was housing, due to the drop in rental rates and natural gas prices. This decline was contained, however, by the increase in electricity rates.
There was a 4.4 percent yearly decline in the “other goods and services” category, mostly due to the cuts in personal hygiene product prices and vehicle insurance rates.

Transport costs went down by 3.5 percent, mainly thanks to falling gas prices and the dip in maintenance and repair costs for private vehicles. This drop was tempered by the increase in ship, airplane and taxi fares, the ELSTAT figures showed for July.

With more than half of July forming part of the summer sales, apparel prices went down by 3.3 percent from July 2014, while household goods and services were down 2.3 percent from a year earlier.

The drop in the education sector amounted to 3.1 percent, as tuition fees posted a decline, with recreational and cultural activities recording a 1.7 percent fall.

The health category reported a 1.4 percent dip courtesy of the decline in medical, dentistry and paramedical service rates as well as pharmaceutical products.

The hotels-cafes-restaurants sector was a virtual non-mover (falling just 0.4 percent) as the drop in restaurant prices was largely offset by the hike seen in hotel rates.