ECONOMY

Inflation soars to 10-year high

Greece’s consumer price index jumped in May by a higher-than-expected 4.9 percent year-on-year, the highest in 10 years, with a considerable slowdown not expected until late in the year. The National Statistics Service (NSS), Greece’s statistics office, said consumer prices accelerated to 4.9 percent from 4.4 percent in the previous month on the back of rising oil and food prices. «An upward trend was on the cards but May’s figure was higher than expected,» Nicholas Magginas, economist at National Bank told Kathimerini English Edition. Apart from rising oil prices pulling transport costs sharply higher, food prices continued to rise steeply in May. NSS data showed that flour and butter prices soared by 20 percent and 30 percent, respectively. Seed oil leapt 37 percent. Greek inflation is one of the highest in the eurozone and has been harming the country’s competitiveness for a number of years. Eurozone inflation surged to a historic peak of 3.6 percent on an annual basis in May. Development Minister Christos Folias has been in talks with supermarkets recently in a bid to contain price hikes but retailers are laying the blame on producers. Economists expect the figure to average out to about 4.2 percent for the year with a dip not expected until the last few months of 2008. «Strong second-round affects are starting to appear, such as in processed foods and the services sector. Inflation is unlikely to fall to below 4.3 percent before the fourth quarter of the year,» added Magginas. The Finance Ministry recently revised upward its forecast for the year to 3.5 percent from a previous 2.8 percent inflation projection. NSS chief Manolis Kontopyrakis stopped short of giving any predictions on June figures due to volatile energy costs. «Due to turmoil in the price of petrol on international markets, a forecast on the course of inflation is impossible,» he said. Greece’s EU-harmonized inflation figure hit 4.9 percent on an annual basis from 4.4 percent in the previous month. [email protected]