ECONOMY

Fuel prices expected to propel July’s inflation rate higher

Greece’s consumer inflation is expected to have climbed in July, pushed higher by soaring fuel prices and expensive fresh produce, economists said yesterday. Analysts surveyed by Reuters produced a 3.4 percent median forecast for July, compared with a 3.2 percent annual inflation rate in June. «Energy prices add about 1 percentage point to July inflation, whereas fresh fruit and vegetables add 0.2,» said economist Nick Magginas at National Bank, who also forecast an acceleration in July’s core inflation. The price of unleaded gasoline has gone up by as much as 10.5 percent to hit 1.16 euros per liter. Greek inflation has long outpaced the eurozone’s average, which is seen as unchanged at 2.5 percent in July. Inflation has been cited as a top concern along with unemployment in Greek opinion polls. Athens is targeting an average inflation rate of 3.2 percent this year against the European Commission’s 3.3 percent forecast. In 2005, Greek inflation averaged out at 3.5 percent. In addition to the direct impact of high oil prices, economists also cited secondary price effects pushing inflation higher in July and in the second half of 2006. «The upward bias will be maintained in the second half, as the rate hikes by electricity utility Public Power Corporation and tax increases on mobile phones and cigarettes will have an impact,» said economist Michael Lambrianos at Piraeus Bank. «This will result in a higher-than-expected inflation rate of 3.5 percent for the year,» he said. The National Statistics Service will release July headline and EU-harmonized inflation data tomorrow. (Reuters)