Greece: Galloping inflation shrinks purchasing power of Greeks

ATHENS – Galloping inflation, driven by the energy crisis, has dramatically shrunk in recent months the purchasing power of people in Greece, who are bracing for a heavy winter.

“People are under a lot of pressure because wages have not increased and there are no other resources,” Nikos Karonis, an electrical appliances trader in Athens, told Xinhua recently.

Over the past four months, Karonis has seen his customers trying to find economic ways to keep warm, from electric blankets and small heaters to wood stoves and dehumidifiers.

Although the Greek government is adopting support measures, Karonis said his consumers still found it challenging to cope with the current crisis.

The inflation rate in Greece was 12 percent in September and 9.1 percent in October, according to the Hellenic Statistical Authority (ELSTAT).

According to a study released this month by the GSEE Labor Institute, an umbrella union of private-sector employees, minimum wage earners in Greece lost some 19 percent of their purchasing power between April and October 2022.

Inflation hits poor households harder, as they need to spend a bigger percentage of their monthly income on covering basic needs.

Those with a monthly income lower than 750 euros (780 U.S. dollars) have lost around 40 percent of their purchasing power. An estimated 9-14 percent of Greek households live on an average monthly income of 751-1,100 euros.

“This winter will undeniably be a difficult one,” Greek Energy and Environment Minister Kostas Skrekas told Xinhua recently.

“On the other hand, the Greek government has taken decisive measures to ensure affordable energy prices for Greek consumers, households and businesses, but also to safeguard energy security and supply adequacy. As long as this energy crisis lasts, we will continue to subsidize electricity bills,” he said.

According to the Finance Ministry, the government has allocated more than 10 billion euros in a year to help the economy and society cope with the new crisis via subsidies for fuel, electricity and natural gas.

More than 200,000 beneficiaries receive subsidies amounting to 30-50 percent of the price of new high-efficiency refrigerators or air conditioners based on income criteria, according to the Energy and Environment Ministry.

Karonis said that the vouchers offered by the state to recycle electrical appliances have indeed boosted traffic in stores, but state aid has its limits and pressures continue to mount.

“The only certainty is that in the coming months we will see dramatic images. People are very anxious, and I think we will see in the near future a sharp drop in consumption,” he said.

In its report, the GSEE Labor Institute also said that the cost-of-living crisis still needs to be adequately addressed.

“The problem in our country is a combination of the very high initial price of energy and the low incomes of households, which see their purchasing power and standard of living constantly shrinking,” it said.

The institute believes that wages should be substantially increased and direct and indirect taxes should be lowered. Furthermore, energy prices should be better controlled and higher taxes should be levied on the country’s energy producers and suppliers.

The Greek government has taken steps in this direction in recent months and has pledged to introduce further support measures next year. The authors of the GSEE study also called for bolder steps to offer more breathing space to consumers.

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