Inflation, despite the lionizations and spells of the competent Minister of Development Takis Theodorikakouinsists and does not say to retreat below the 3% zone. And it persists because a multitude of factors and conditions, domestic and international, of missing or imperfect, especially in the Greek case, competition included, affects the functioning of the many interconnected and interdependent markets, increases costs, pushes up producer prices and those with in turn put even more pressure on consumer prices.
Thus the prices on the shelf do not go down, except slightly and on a case-by-case basis, the cumulative and not covered by any wage increases, the weight of the revaluations remains unsustainable for the majority of citizens, and what is worse, the atmosphere remains inflationary, fueled mainly by instability and nervousness that prevails in the energy sector and in particular in power generation.
Electricity prices
As long as the high electricity prices do not subside, the upward trends in the prices of goods and services will remain active. And because the domestic electricity market remains locked in the tough European specifications of the energy transition and dependent intermittently on the war in Ukraine and Russian natural gas, there is nothing to prevent control of electricity prices despite the optimism of the responsible minister Theodorou Skylakakis.
In fact, on the contrary, new factors will appear, apparently, to feed a new, secondary as the experts say, cycle of appreciations in the near future. It is not by chance that large commercial chains receive relevant signals, alarmingly enough, not only for the course of prices but even for the adequacy of goods.
Managers of the biggest supermarkets point to a new focus of disruption coming from wealthy Central and Northern Europe, linked to increasingly strict European rules on the vast swath of cattle farming and the large dairy and meat production chain that goes with it.
As is well known, cattle farming is blamed for increasing carbon dioxide emissions, which has allowed the inflexible Brussels bureaucracy to tighten farming rules and require energy transition specifications and thus excessively increase the operating costs of the relevant production units.
As a result, many of them cannot withstand and are heading towards closure and abandonment of cattle breeding. Recently, it has been observed that in the Netherlands, Germany, Belgium and elsewhere livestock units are massively shutting down their operations, significantly affecting the production chain of many dairy products and of course their prices.
Big price issue
Already, as senior executives of large commercial chains report, supply and adequacy problems for specific products are appearing in Athens.
They typically mention popular, widespread, Dutch cheese products, which are difficult to source.
They estimate that if the crisis of the cattle breeding units is not controlled, a major price issue will arise in a wide range of products, including animal fats, milk, cheeses and, potentially, meat and its products. If the specific trend of abandoning cattle breeding in Central and Northern Europe is confirmed, the entire food market of the Old Continent can be shaken up.
In response to the question of whether there are opportunities for import substitution in our country, the managers of the Greek chains hesitate, reminding us that our country is almost entirely dependent on imports of milk, butter, cheese and meat.
Even the Greek feta is not sufficient to cover the needs of the domestic demand, not to mention the production of hard cheeses, which is characteristically lacking. And they point out that, with the exception of some attempts at mass breeding of cattle in Epirus, similar phenomena of abandoning the breeding of small and large animals have recently been observed in our country, either due to a lack of personnel or due to an excessive increase in the cost of animal feed.
And climate change is also not indifferent. The floods in Thessaly hurt the production of goods and animal husbandry and this year it was the prolonged heatwave and water shortage that affected the primary sector.
Supplier pressures
Be that as it may, new aggravating factors are coming to add critical matter and keep the inflation monster thriving and ravenous. However, the managers of the large commercial chains, who by the way this summer saw supermarket sales being almost scandalously favored by the growing but more moderate tourist flow, are already feeling the pressure of their suppliers for higher prices with the onset of autumn.
Regardless of any external pressures, domestic production is faced with a host of other factors and conditions that drive costs, some of which will almost certainly be passed on to final consumer prices. Of course, prominent, as we mentioned above, are the electricity prices, which have evolved into a strong cost-increasing factor for any activity, commercial or productive. Following these only optimism does not prevail in the wider business market for the control of inflation. Almost all commercial chains estimate that due to high energy costs they will be faced with a new wave of price increases from their suppliers and are looking for ways to limit the burden of these on the final prices. Bad lies, all the evidence points to the assessment that we are heading for a crisis in the supply zone.
Which in turn brings back the problem of the insufficient production model, the rearrangement and reconstruction of which now seems to be forced by the circumstances.
As long as it remains locked in import-driven tourism, it will constantly raise new problems, recycling the vicious inflationary cycle that eats away at incomes and disempowers the grassroots.
In other words, a bold shift in favor of domestic production is required as soon as possible. Only with an increase in supply and substitution of imports will the Greek economy be able to escape from the permanent inflationary grip that has been stalking and oppressing it in recent years.
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