The mystery of our rising prices

The trend of price increases has been well documented by official statistical studies and publicized by the personal testimonies of consumers. Fueled by television coverage, these testimonies have become extremely influential because the public mistrusts official studies. Most say they believe the real rate of inflation is much higher than the one offered by officials. During the most recent hike in electricity prices, a certain television channel presented a kebab store owner despairing over the 6 percent hike in power rates and explaining that he is obliged to ascribe the extra cost to the customer by increasing his kebab prices accordingly. But according to what? The cost of electricity is only part of his overall production costs, so boosting kebab prices by 6 percent is unjustifiable. Such craftiness is blatant profiteering. Indeed, it seems that rising prices are encouraging this trend of profiteering. Citizens most commonly react to this trend by complaining that they do not have enough money to pay higher prices. Generally, when one’s income is insufficient, one restricts consumption. But why does this same logic not apply to profiteers? No one would dare profiteer if unsure about the public’s reaction. European Union statistics recently showed that Greece’s per capita income last year was only 82 percent of the EU average while prices in Greece are 90 percent of the EU norm. But instead of restricting their consumption, Greeks have increased it by 9 percent. What’s behind this mysterious shortfall? Loans? Tax evasion? It’s unclear. What is certain is that we need to be better informed about fluctuations in incomes and prices.