No. 158. ΤHE EVOLUTION OF PRICES, THE RECENT INFLATION WAVE IN GREECE, AND POLICY SUGGESTIONS

P. Prodromidis in cooperation with Ι. Τsamis. 2024. (in Greek)

The sharp, persistent increase in the general price level in Greece from 2021 on, along with the way statistics regarding the economy are discussed in certain media outlets in Greece, give the impression that per capita GDP is falling, but this is not the case. The paper examines the way the economy evolved in terms of real per capita GDP, prices, and welfare over time, and in relation to the rest of the EU-27, as well as the factors that seem to affect the general price level. The findings are useful both for dealing with inflation in Greece, and for expanding real income in Greece.

Sooner or later the European Central Bank will reign in the inflation rate to the desired 2% target in the eurozone. However, to the extent Greece has considerable catching up to do due to its long economic recession in the 2010s, as well as new needs to address, an expansion of the aggregate demand and price increases seem inevitable. To offset the latter, it is necessary to raise the aggregate supply: to strengthen production and competition across markets, industries, products and inputs; to cease raising the minimum wage and indirect taxes; to restore mid-season sales and consider ideas and practices likely to affect price reductions; and to address imported inflation, whether it stems from the pricing practices of multinationals or from the import pricing practices of the European Commission.

 

 

 

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 (pdf)