The data on his success came as an unpleasant surprise. inflation in May 2023, as although for the first time since September 2021 the overall consumer price index was below 3%, namely at 2.8%, food prices remain at a very high level, having increased by 11.6% compared to May 2022.

Preservation product prices at high levels is not even a consequence of slow de-escalation, but from its elements Greek Statistical Office it turns out that there are new important revaluation last month. Thus, while there was a slight decrease in food prices of 0.1% in April 2023 compared to March 2023, the situation was reversed in May: prices rose by 1.8% on a monthly basis. In fact, the most basic foodstuffs, such as flour, rose 8% in May compared to April.

This development is postponing – post-summer at best – the end of the cycle of rising food prices, which market participants initially estimate will occur at the end of the first half of 2023. And the above estimate is, of course, made on the assumption that there will be no extraordinary events and on the basis of existing forecasts of world production of basic products such as cereals and others.

Two main reasons

Why do many companies, domestic and multinational, continue to supply price lists with rising prices, even if they are less intense compared to last year?

There are two main reasons put forward by the market to justify a new round of value appreciation:

• Firstlythat last year, businesses, industry and retail absorbed only a fraction of the increase in production and operating costs, because the transfer of the entire increase would lead to even greater losses in demand and market share.

• Secondlythat there are still stocks of raw materials that were purchased at high prices, and therefore, until these stocks run out, the cost will also be shifted to the retail price.

More basic foodstuffs such as flour saw price increases of 8%.

Finally, there is also a relatively small proportion of companies that evaluate their products at the beginning of each year and do not make adjustments afterwards. These companies set prices for their products before the start of the war in Ukraine and now continue to raise prices, which they did not do last year.

It is reasonable, of course, someone will ask why in Greece retail prices they increased very quickly, within a week of the Russian invasion of Ukraine, whereas in this case the opposite was true, i.e. there were stocks of raw materials that were bought at lower prices, but also finished goods that were produced at a lower price . .

A typical example of a phenomenon also called the “rocket and wing effect”, that is, an asymmetric adjustment of retail prices in relation to costs (they take off like a rocket when costs rise, but fall slowly, like a falling feather when costs fall by cost), is flour .

With soft wheat prices rising by 80-100% when the war in Ukraine began, both retail and wholesale flour prices rose very quickly. Despite the fact that grain prices have fallen, the decline in wholesale prices for flour is only 4%, because. notes “Daily” President of the Hellenic Bakers’ Federation Michalis Musios.

According to him, although there were no massive revaluations of traditional bread in 2023, the same cannot be said about industrial bread, and even more so sliced ​​bread.

The great “sensitivity” of prices in Greece to international events is also visible in the data on their evolution. food inflation in our country and in the rest of the Eurozone, partly due to the country’s high dependence on imports of primary and secondary raw materials.

In Greece, already in August 2021, when prices for energy and raw materials began to rise, food inflation was 3.4% according to Eurostat compared to 1.9% in the Eurozone.

In December 2021 in Greece, it already exceeded 4% and was at the level of 4.5%, and in February 2022 (the Russian invasion of Ukraine took place on February 24, 2022) jumped to 7.5%, against 4.8% in the Eurozone , 4.7% in Portugal and 5.2% in Italy. As of April 2022, it is in double digits, 11.3%, while in the Eurozone it was 7.7%.

Since last autumn, food inflation in Greece has been at a lower level than in the eurozone.