ECONOMY

Inflation falls to 3.8 percent in August

Headline inflation in August eased to 3.8 percent year-on-year from 3.9 percent in the previous month, the National Statistics Office said yesterday, underscoring the general consensus which sees a slowdown in the last quarter of the year. Annual harmonized inflation also continued its downslide, coming in at 4 percent from 4.2 percent in July. The annual average rate however surged to 3.7 percent from 3.6 percent, increasing for the sixth consecutive month. Platon Monokroussos, head of research at EFG Eurobank Ergasias, said consumer prices could see a slight spike this month before falling to below 3.5 percent in October on the back of favorable base effects. We continue to forecast a more pronounced deceleration in Greek inflation during the last quarter of the year due to favorable base effects, lower oil prices, a stronger euro and slackening domestic demand, he said in a research note yesterday. Monokroussos said his prediction was based on the sharp fall in the wholesale price index in July released yesterday which showed a decline to 4.5 percent from 5.4 percent the previous month. Alpha Bank analyst Dimitrios Maroulis was similarly optimistic over the inflationary trend ahead. I see inflation dropping to 3 percent by year-end, he predicted. His forecast of 3.3-percent average inflation for 2001 however is more upbeat than Monokroussos’s 3.5-percent estimate. The government has stuck to its official target of 2.9 percent. Consumer prices in August benefited from the continuing decline in both domestic gasoline and vegetable prices. Fruit and mobile phone rates were cheaper by 5.6 percent and 1.4 percent month-on-month respectively. Fruit, potatoes and pork showed the biggest price increase year-on-year, up by 34 percent, 33.6 percent and 15.2 percent, respectively. One measure which allows companies to set up an investment fund with part of their profits for investments in the 2002-2005 period is designed to help firms plough their earnings back into the business.