The Hellenic Statistical Authority (ELSTAT) data, announced today, are expected to show the high inflationary pressures for the month of November. Reportedly, the national consumer price index made another big jump last month and there is a possibility of it breaking the 4.5% barrier from the 3.4% it was in October, breaking, in this way, an 11-year record. It should be noted that Eurostat has set the harmonized index in November at 4.3% from 2.8%, in October, and 1.9%, in September.
The domino effect of price increases that extends to basic foodstuffs is affecting household incomes, affecting the economy as it slows down consumption and burdens business costs.
Electricity subsidy
The economic staff states that the support measures to deal with price increases will continue and, in this context, the subsidy on the electricity and gas bills is expected to be maintained after December.
At the same time, a recent warning study by the National Bank sends a warning signal for the peak of inflation, in the first quarter of 2022, which typically states that “the annual change in the CPI is expected to approach 4.5%, in the 4th quarter of 2021, and exceed 5,0%, in the 1st quarter of 2022, declining to 3.5%, in the 2nd quarter, and to 0.6%, on average, in the 2nd half of 2022. Overall, the annual change in CPI is estimated to be around 2.5%, in 2022. In an extreme case of stronger secondary effects from energy and of commodity prices stabilization at the current very high levels, by the end of 2022, without the implementation of compensatory measures, structural inflation would be 3.4%, on average, in 2022 (compared to 2.0% in the baseline scenario), with a very gradual slowdown over the course of the year, while the CPI will show a further acceleration of over 6.0%, in both the 4th quarter of 2021 and the 1st quarter of 2022, with its annual average estimated at around 4.0%, in 2022 (compared to 2.5% in the baseline scenario). In addition to the turmoil in public finances and the real economy, inflationary pressure is squeezing disposable income of households by reducing their purchasing power.
Price increases effects are stronger in low incomes, as recorded in the latest report of the Hellenic Confederation of Labor INE-GSEE, concerning the economy and the employment. Only rising prices for housing, transportation, food and non-alcoholic beverages, in October, reduced the purchasing power of the minimum wage by 7.4%, while continued increases in energy prices, in November, reinforced the erosion of its purchasing power by nearly 10 %.
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