Inflation rate jumps to 4 percent in January, but authorities not worried

The consumer price index’s annual growth rate jumped to 4 percent in January, its highest level since March 2003, from 3.1 percent in December 2004, the government announced yesterday. However, the head of the National Statistics Service (NSS) said this was no cause for concern, as the cause for the higher inflation was the fact that the start of the winter sales period had been pushed back to early February this year, from early January last year. «January inflation would have been around 2.9 percent, discounting the winter sales factor,» NSS head Manolis Kontopyrakis told reporters. Prices went up 0.3 percent in January, relative to December 2004. Last year, prices in January had dipped 0.7 percent, showing the impact of winter sales. Kontopyrakis predicted that at end-February the inflation rate would fall back to 3 percent, despite rising vegetable prices and scheduled rises in taxi fares. Core inflation – which excludes volatile fuel, fruit and vegetable prices – rose even further, to 4.8 percent, from 3.3 percent in December. Kontopyrakis claimed that if sales had started as early as last year, core inflation would have fallen to 3.2 percent. Clothing and footwear prices shot up 12.7 percent last month, compared to January 2004, precisely because of the postponement of winter sales. The NSS chief was upbeat on inflation prospects for the coming months, saying the rate could fall as low as 2.5 percent by May. For the whole year, he forecast that inflation will average 2.9 percent. Kontopyrakis’s predictions were supported by Alpha Bank economist Dimitris Maroulis. «If we assume lower or steady oil prices in the coming months, inflation may ease below 3 percent, looking ahead,» said Maroulis.