Destroyed crops, euro boost CPI

The unprecedented wave of bad weather sweeping across Greece has caused great destruction in the agricultural sector, pushing up prices for fresh produce which, combined with the higher prices stemming from the adoption of the euro, are threatening to push up the consumer price index. Estimates by the National Statistical Service are that year-on-year inflation could climb to 3 percent in December (from 2.4 percent in November) while it was quite possible that it could jump to 3.5 percent in January. The freezing weather that hit Greece in December and is continuing has caused serious damage to vegetables and citrus crops. Almost all vegetables produced outdoors were destroyed. An estimated 525,000 tons of oranges and lemons were damaged and it will take about 10 years for trees to recover. National Economy Minister Nikos Christodoulakis yesterday expressed satisfaction at the euro’s penetration in Greece, saying that 70 percent of Greeks had conducted at least one transaction involving euros (even if this involved receiving change in the new currency). «Some 560 billion drachmas have been withdrawn, while all drachmas still in circulation should be removed from the market by the end of the month,» Christodoulakis said. But he expressed concern at the fact that some prices are being raised as prices from drachmas are being rounded off upward when translated into euros. «It would be very unjust for the image of the euro to be blackened by unjustified price increases,» Christodoulakis said after a meeting with the board of the Hellenic Banks Association. He said that inspectors were out in force to keep an eye on prices. Attica, the neighboring provinces of Boeotia and Evia, and the province of Rethymnon on Crete were declared in a state of emergency, due to record snowfall over the weekend. As the cold front moved southeast yesterday, the area of Hania on Crete was also declared in a state of emergency with dozens of villages cut off by snowdrifts.

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