Filenews 2 February 2024
The measure of general inflation and food prices are falling, but the feeling among households and those who consume in general is that the price is still there, since the vast majority of products and services keep embedded in their current prices the severe increases that preceded the last two years.
In addition, there is widespread concern that a new round of price increases is coming in a significant part of trade, due to geopolitical developments and the activity of Houthi rebels in the Red Sea, which threatens supply chains.
Already yesterday, Phileleftheros wrote, citing statements by retail trade officials, that in recent days the first increases have been recorded in products imported into Cyprus through the new – more time-consuming and more expensive – process of transporting them from Asian markets, now through Africa, instead of through the Suez Canal.
Yesterday's release of inflation data from Eurostat shows that the harmonised index was at 2% in January and the consumer price index based on the measurement of Statistics at 1.7% from 1.6% in December 2023 and 7.1% in January 2022. The food index is at 3% in January, from 3.6% in December, based on the methodology used by Eurostat, while based on calculations by the Statistical Service it is at 2.6%, from 10.3% in January 2022.
The question is when and how substantial reductions in product prices will begin to be recorded, so that consumers feel reflected in their daily lives the numbers that show a de-escalation of inflation.
Through yesterday's data, the containment of inflation does not seem to concern all commodities. For example, the continued increase in the price of olive oil, approaching 50%, is inconceivable. In January '24 the price of olive oil increased 49.2% year-on-year (compared to January '23.
The Commission had indicated in November 2023 that the 2023/2024 olive growing season is expected to show an increase in production, but only 9% compared to the already low levels of 2022/2023.
The price of rice rose 14.8% in January year-on-year, pork by 3.1%, lamb and goat meat by 12.7% (from 22.8% last year, compared to '22) while poultry prices fell 4.3% in January year-on-year.
Prices of fresh fruit rose 18.9% in January year-on-year, while vegetables appreciated by just 0.4%. Prices for mineral waters, soft drinks and juices rose 7.7% in January, soft drinks 9.7%, wine 2.1% and beer 6.9%.
Inflation in the Eurozone at 2.8%
In the Eurozone, inflation fell to 2.8% in January '24, from 2.9% in December, and is not far from the 2% target set by the European Central Bank to begin the long-awaited easing of monetary policy by cutting interest rates.
In the euro area, food, alcohol and tobacco prices rose 5.7%, compared with a 6.1% increase in December, and non-energy industrial commodity prices slowed, falling to 2% from 2.5% in December. Core inflation eased to 3.3% from 3.4%. The lowest levels of the consumer price index were observed in Finland with +0.7% p.a., Italy with 0.9% and Latvia and Luxembourg with +1%.
In contrast, the highest inflation in January was in Estonia at 5% per annum, with Croatia at +4.8% and in Austria – Slovakia it ran at +4.3%. In Greece, from 3.7% in December, the consumer price index slowed to 3.2%.
