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Economy

Astronomical Olive Oil Prices, Corporate Greed Driving Greek Inflation

ATHENS – Eye-watering prices for olive oil—€15 ($16.28) per liter for a decent Extra Virgin brand—and corporate gouging that hasn’t been stopped despite fines, have severely impacted many Greek households and show no signs of abating.

The New Democracy government has attempted to control supermarket prices, even penalizing domestic and multinational companies profiting as demand remains strong enough to keep consumers purchasing many branded products.

Despite what appears to be another record year in tourism and ongoing economic recovery—which has not alleviated the struggles of families coping with high prices, low salaries, and high taxes—the elevated cost of shopping seems likely to continue.

The 2023 deadly fires and subsequent floods that devastated a significant portion of Greece’s agricultural heartland in Thessaly also destroyed crops, leading to reduced supply but increased demand—and higher prices.

A study by National Bank of Greece (NBG) Chief Economist Nikos Magginas referred to “unshakable” inflation over the previous seven months, a concern for the government with the June 6-9 European Parliament elections serving as a political barometer.

The bank anticipates a slowdown to 2.9% in the second quarter and 2.6% overall in 2024 for inflation, in line with estimates from Alpha Bank, although concerns remain about the impact of raw materials.

NBG reported that olive oil prices, which jumped 63.7% in April, accounted for half of the inflation, with many Greeks unable to afford their country’s national agricultural symbol that ranks among the world’s best.

However, so-called “Greedflation”—corporate profiteering—has added about 5% to food costs in the past two years, despite a drop in some raw material prices, with companies maintaining high prices because consumers are still paying them.

NBG noted that profit margins haven’t been reduced due to strong demand and the chronic structural constraints of the Greek market, but also of the international distribution chains of processed products and raw materials.

Government spokesman Pavlos Marinakis told Mega TV that the high food costs are the most significant problem facing Greece—and Europe—citing figures from the European Union’s statistics agency, Eurostat.

He mentioned that the government has implemented measures, which included a “Household Basket” where supermarkets kept prices low on 51 essential items, but emphasized that there are no “magic solutions.”

Prime Minister Kyriakos Mitsotakis got European Commission President Ursula von der Leyen—a friend—to consider investigating profit margins of multinationals, while Marinakis rejected proposals from the major opposition SYRIZA to cut the Value Added Tax (VAT), which is as high as 24% on some food products.

He stated that cutting the VAT was “unrealistic,” although the economy is growing and record tourism in 2023 generated more than €21 billion ($22.78 billion). Still, the government says it cannot afford to do more yet to help consumers.

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