Price hikes shock Greeks: +50% on electricity bills, 15%-20% on essential goods

Price hikes with shocking 50% increase on electricity bills as from September and 15%-20% up in several essential goods are threaten to push one in three Greek household into impoverishment. The government signals that it will take measures to contain the problem through a series of intervention in a market that operates with its own rules.

The Greek government justifies the hikes with increases in energy and consequently in transport worldwide as well as with the new favorite narrative of the “climate change”, that is prolonged heatwave and drought that increased the consumption demand.

At least two ministers warned of the price hikes at the cabinet meeting on Thursday describing them as “a global phenomenon that will not leave our country unaffected.”

Development Minister Adonis Georgiadis cited as example Greeks’ favorite drink, the coffee and said that its price at cafe can go up from 2 euros to 5 euros. *Typical for this minister is that he cited “the drought in Brazil” as if there is only one country that produces coffee.

Rural Development Minister Spilios Livanos spoke of price increases of more than 40% in animal feed and in raw materials that affect the construction sector.

It should be noted that media were speaking of 50% hikes on electricity bills already beginning of August.

Prime Minister Kyriakos Mitsotakis will announce measures to ease the pressure on electricity consumers at the International Fair of Thessaloniki next weekend, media report, adding that the Energy Minister will ask the electricity sector to contribute toward the containment of rate hikes.

Power rates get priority as Finance Ministry sources say that the hikes will have some permanent features which will hurt large and socially vulnerable sections of the population, reported kathimerini adding that the natural gas prices are soaring as well.

“An increase in the prices of essential goods 15% -20% should be considered as very probable,” Professor of Economics at the University of Macedonia Giannis Hatzidimitriou but also consumer organizations told newspaper ethnos on Saturday. They point out at the risk that one in three Greek households will face small or big impoverishment problems in upcoming winter.

Households at risk of impoverishment

Chatzidimitriou recalled that due to various parameters price increases began already in the first months of the year [KTG reported about in June] and  showed significant upward trends from late spring onward. He predicted that a clear picture of how the situation will develop in household wallets is very likely in upcoming October or November.

However, based on current data, an increase in commodity prices of around 15% -20% should be considered very likely. The above percentage may not be too high, however, in no case can it be characterized as easily manageable by families that even today have very little income available to make a living.

“If this upward trend in prices continues, I believe that 50% of households will not face any problems. A 20% will be forced to reduce consumption, but I believe it will endure, but the remaining 30% will face serious problems, especially if the increase in prices is great for basic goods. For example, if bread or milk increase by 10%, the situation will be generally manageable, however, the problems will be great and some families will be very stressed if their prices increase by 30% or 40 %,” the professor said.

Profiteering

President of the Center for Consumer Protection (KEPKA), Nikos Tsemperlidis, called on consumers and producers to rally for a collective response, in order to send a strong message about the poor functioning of the market and reduce the phenomena of impoverishment.

Tsemperlidis underlined that there are already phenomena of speculation and profiteering in the market.

PS How will the PM and the government contain the price increases in the energy sector? Advising us to switch off consumption? He will probably announce some direct and indirect taxes decreases and consumers paying +50%  on their electricity bills and +15%-20% in the essential goods will see the benefits of the government measures in the …years to come.

Of course, there is not talk of salary increases, especially when Greeks fear of another lockdown due to the pandemic even if the government vehemently rejects such an option.