Price rises put the squeeze on households

Most Greek households these days are having a hard time balancing their budgets. The average Greek is unable to put anything aside, and in most cases the family budget is in the red. Nowadays, Greeks are working simply to cover the rising cost of basic requirements. The prices of 42 food products, according to Development Ministry data, rose by up to 24.75 percent in 2003. Fruit and vegetables are 25.2 percent more expensive than they were last year. Many manufactured goods from multinational companies are at their most expensive ever. For example, Gillette Normal shaving cream (250 ml) is sold for 2.10 euros in Italy but 3.23 euros in Greece, although the average Greek income stands at 67.8 percent of the European Union average. A survey by ICAP this fall showed that 50.5 percent of Greek households found themselves financially worse off in 2003, compared to 44.5 percent in 2002 and 34.5 percent in 2001. Naturally, these price rises are not going to stop; there are forecasts of a 20 percent rise in the price of confectionary ingredients, meaning more expensive Christmas sweets. Traditional Greek festive sweets such as melomakarona and kourabiedes are likely to range from 8.50 euros and 12.50 euros per kilo. As for the new year, despite the imminent election campaign, price hikes in supermarkets are expected to be 3 to 4 percent higher during the first two months of the year, perhaps even reaching 14 percent. The euro is chiefly to blame for the higher cost of living. «The change of currency opened a Pandora’s box,» Stravros Mavroudeas, an assistant professor at Thessaloniki University, told Kathimerini. «It led to a rounding-up of prices and an automatic devaluation, as well as confusion over the real value of the currency compared to the drachma. It was expected that the introduction of the euro would send inflation sky-high. That the consumer price index would skyrocket had been predicted in studies made by the central banks of France and Germany. If this had been forecast for countries where the euro was almost equal in value to the original currency (as in Germany and to a lesser extent in France), you can imagine the effects on a country such as Greece. There was a wide margin for inflating prices and profiteering was only to be expected.» «In Greece, there had been similar predictions, but they were never made public, since there was no real political will to curb prices. There was no will to do so because it would mean a range of state and administrative controls which are not fashionable.» The president of the consumer organization EKPOIZO, Eleni Alevritou-Iouliemou, spoke of a decline in business ethics and the fact that existing legislation was not being enforced. «The unconditional deregulation of trade operates solely at the expense of the consumer. Not only with regard to prices, but at the level of product quality. We have seen a rise in the number of accusations by consumers of faulty products by major firms or for false discounts on products, gifts and special offers that turn out to be not so free when the customer reaches the cashpoint. The ministry is doing nothing about this,» added Mavroudeas. Last September, there was a major campaign waged to «freeze» prices until the end of this year (supermarkets had between 2001 and 2002 increased their profits by 220 percent). The campaign was seen as a marketing ploy by some, by others as a confirmation of the government’s inability to take effective action to stop transferring costs to the consumer. «Real wages in Greece today are still at 1980 levels. All these years we have had a negative redistribution of income. On the other hand, European unification has put enormous pressure on the less developed states – including Greece – to keep wages down so as to keep up with the other states,» added Mavroudeas.