Inflation rate in Greece was 2% in April compared to 2.4% in March, up from 3.1% in the same month last year, according to data released by Greek Statistics Authority ELSTAT on Friday.
However, within the past year there were significant further price increases in natural gas (29.9%), housing rents (10.8%), holiday packages (9.8%), health insurance premiums (7%), clothing and footwear (4.6%) and food products in general (2%).
Between April and March, price reductions were recorded in natural gas (12.6%) and electricity (8.4%) stand out, while prices increased in passenger transport by plane (19.3%) and housing rents (0.6%).
PS It’s still remains a mystery why one spends more and more for weekly purchases from supermarket. Especially prices for fresh vegetables and fruits have skyrocketed in May, with a kilo of fresh beans or peas or whatever is seasonal to be at around 6 euros, while cherries are sold at 18 (!) euros at the farmers’ markets.
Not such a big mystery.
Firstly when inflation reduces prices are still going up – just not as fast. You need deflation for prices to go down and no government can afford to let deflation take hold. Inflation is their preferred method for defulting on debt.
Secondly the people constructing the index use substitution. If the price of an item in the basket used to calculate CPI increases a lot they remove that item and replace it with one that hasn’t gone up as much. The argument used is that if apples have gone up 10% and oranges have only gone up 1% people will stop buying apples and start buying oranges. That keeps the index as small as possible despite much bigger inflation in what you are buying.
What kind of drugs do you take???
The comment about inflation and deflation is correct. I am not certain about the substitution as although I know that this line of reasoning is often used in elementary economics I do not know if this is the default method of calculating CPI.
to my %nowledge, no drugs here.
Governments want inflation to be as high as possible, to inflate away debt, BUT the measure of inflation to be as low as possible, to avoid workers demanding large pay increases. Two standard techniques are used to keep CPI as low as possible.
One is substitution as described above.
The second is performance indexing. For example the price of a PC stays about the same but the performance of this year’s PC is higher than last year’s PC. The increase in performance is used to calculate an effective price for this year’s PC as if it had the same performance as last year’s, i.e the price is reduced. The same technique is applied to cars, TVs etc where the features increase.
There is a third problem with CPI but that is inherent in its design. It does not include housing costs. For most people housing costs are the biggest single item in their budget and often those costs are increasing faster than anything else BUT that is not reflected in CPI.
The result is a low inflation index while every day you feel much poorer.