CPI steady, above eurozone’s

Falling oil prices helped Greece’s inflation rate remain steady at 2.9 percent in December, the National Statistics Service said yesterday, but it remained stubbornly above the eurozone average. Consumer price inflation has dropped consistently since July but remains a full 100 basis points above the eurozone’s average, with economists blaming weak competition in product and labor markets. Statistics agency data showed that the prices of goods and services ranging from food, alcohol and housing to restaurants and hotel services all rose in the month, offsetting the benefits of a stronger euro which made oil imports cheaper. Stalled government economic reforms have held back competition from helping to lower prices but a continued decline in oil prices will help keep inflation on a downtrend in the months ahead, economists said. «With the drop in oil prices we should not see the rises that took place last year,» said Alpha Bank economist Dimitris Maroulis. «We expect 2007 inflation to average out at 2.9 percent.» January inflation is seen as falling by about 0.2 percent, the Greek statistics service projected. «Lower fuel costs… and a stronger trade-weighted euro will allow a further decline in the year-on-year CPI rate to 2.6-2.7 percent in January,» said EFG Eurobank economist Platon Monokroussos. «We see the 2007 average at 3.2 percent.» The country’s EU-harmonized rate, used to measure inflation in the 12 countries sharing the euro, was also steady at 3.2 percent in December. Based on this measure, Greece’s inflation differential is wider – 130 basis points. (Reuters)