Inflation easing on lower fuel prices

Greece’s headline consumer inflation rate is seen decelerating to an annual pace of 4.7 percent in August from 4.9 percent in July, due to falling gasoline prices, according to a source at the National Statistics Service (NSS), the government’s statistics office. A further reduction is expected in coming months if we continue to see further drops in fuel costs, the source added yesterday. Prices of key consumer goods such as food items have actually registered double-digit growth since last year, compromising purchasing power, particularly of the financially weaker groups of society. Senior government officials have refused to predict how they see the inflation figure shaping up for the remainder of 2008 due to volatile global oil prices. The National Economy and Finance Ministry estimates that inflation for the year will average out at 3.6 percent but this target is no longer considered attainable. The Bank of Greece, the country’s central bank, forecasts inflation to reach 4.2 percent for the year. On the other hand, economists at Eurobank expect consumer prices to end the year up an average of 4.7 percent versus 2.9 percent for 2007. The NSS is scheduled to announce the August inflation figure on September 8.