Inflation stuck at 28-mth high, but could ease in 2008

Greece’s inflation grew at an annual rate of 3.9 percent in January, boosted by high energy costs, but is likely to decelerate later this year on an anticipated slowdown in global economic growth and lower fuel prices. Greek inflation, one of the highest in the eurozone, harms the country’s competitiveness and the economy’s ability to export goods and services. It is also an important factor in private sector wage talks currently taking place. According to the National Statistics Service (NSS), January’s inflation figure was unchanged from December, the highest level seen since September 2005. «The maintenance of the headline consumer price index at high levels is mainly due to high gasoline and heating oil costs and, to a lesser extent, to price increases in cereals and animal feed, which have been recorded in the last few months,» said NSS general secretary Emmanuel Kontopyrakis. Heating oil prices jumped 35.4 percent last month and food prices rose by more than 5 percent. Telecom prices were among the few items easing the burden on consumer pockets, falling by 2.6 percent thanks to less expensive fixed-line rates. Greece’s strong economic growth has helped keep inflation high in recent years. However, an anticipated slowdown in global growth and a drop in world oil prices could ease upward price pressures. Plutarchos Sakellaris, the government’s chief economist who also chairs the Finance Ministry’s council of economic advisers, said the «increase in inflation is considered to be temporary in nature.» «We currently don’t see the need to review the 2008 inflation forecast,» Sakellaris said, speaking to foreign correspondents in Athens. Greece is targeting an average inflation figure of 2.8 percent for the year. The forecasts of economists for the eventual level of the price index this year vary from around 3.0 percent to 3.4 percent. [email protected]