ECONOMY

Greeks prove inflexible in their consumption habits, survey shows

Demand in the Greek market is not at all flexible, a survey by the Institute for Economic and Industrial Research (IOBE) has shown, in a report that explains several strange phenomena in everyday life in this country. This means that the rise in the prices of basic (or non-basic) commodities does not lower demand or consumption. For instance, the flexibility rate on coffee is 0.03, or, in lay terms, if coffee prices were to rise 100 percent, demand would shrink by just 0.3 percent. The same goes for dairy products and drinks. In contrast, however, demand is flexible regarding income: If a Greek’s income rises by 10 percent, then his coffee consumption will increase by 0.75 percent. The recent rapid rise in fuel prices has not affected demand for gasoline in Greece, which is as inflexible as that for coffee. Nevertheless, in Germany the increase in public transport usage was significant, with subway passengers jumping by 20 million in the January-April period. Similarly, the US public transport system is enjoying the greatest demand of the last 50 years, while the US Department for Energy announced that gasoline consumption has gone down for the first time since 1991. Greeks, of course, continue to rely on their cars and not public transport, even though traffic woes are cited as one of biggest by the majority of city inhabitants, according to a recent Public Issue poll for Kathimerini.