Accuracy / Food prices fall everywhere except Greece – Apocalyptic charts

With 263 out of 1,000 Greeks facing the specter of social exclusion (26.3% of the population), according to the official statistics of the European Statistical Authority (Eurostatsee also the table published today in AVGI), the accuracy that sweeps the market is one of the great challenges of economic policy.

The government through the Prime Minister’s lips has repeatedly accepted that “wages in Greece are low”. However, he advertises – as now – the steep increases for employees, which fall short – and significantly so – of the increases of the last three years in the three main categories that absorb almost 100% of the disposable income of the vast majority, especially of employees and underpaid professionals :

1. Housing, in the broadest sense of the term that includes rent, electricity, heating and water bills.

2. Food, because Greece is the most expensive country in the Balkans and food inflation at the beginning of 2024 was even higher than that of Ukraine and… Palestine.

3. The cost of moving, as in Greece for a very long time the price of gasoline, whether oil rises or falls, “flies” between 1.90 and 2=2.15 euros per liter.

Food and Ukraine

It is known that the Russian invasion of Ukraine created a panic in the global food market, especially since the prices of cereals (wheat, corn, etc.) and other basic food items soared to unprecedented heights. The government’s position that inflation is imported and the justification for the failures of the supermarket price containment policy were supported there. When international prices began to fall, the government muttered something about “greed inflation”, but refused to impose the highest tax rate on the “skyrocketing profits of the ‘simple'”.

But now a qualitative change has taken place. The price of grains, and consequently of flours which are a key ingredient in many food categories, has not simply fallen. It is near the lowest point of the last three years and is even down from 12 months ago prices by 23.9% and 4.72% lower than their three years ago price in international commodity markets.

The same is true of corn, which is not only used as the basis of many processed foods, but also as a key ingredient in many animal feeds. Corn is 31.59% lower than its price a year ago and 13.72% lower than three years ago. According to the tables published in Sunday’s DAWN and derived from Piraeus Bank’s monthly bulletin on developments in the food market, even the weighted composite index of agricultural products is down by 14.59% from the 12-month-ago level.

The “economy of greed”

However, despite the drop in basic categories of food and despite the clear retreat from two years ago levels (due to Ukraine) of the basic factors in food production (current oil, fertilizers), in Greece the dance of speculation continues well. Despite the volume reduction in consumption, the turnover of the supermarkets is increasing and with it the excess revenues of the state budget from the VAT.

Declining volume of products sold is falling or largely replaced by private label products (non label). This, of course, means that there is no demand inflation. And no more cost inflation for a wide range of products (although here the financial costs due to increased interest rates must also be taken into account).

Obviously, then, the continued accuracy is largely related to the government’s complete inability to deal with this greed, as it seems to be perfectly comfortable with it as it creates the conditions for a gigantic increase in government revenue. And this means an “illustrated” cover in the surplus budget that Mr. Mitsotakis circulates from international organization to organization.

Small rise from early 2024

Although there has been a long period of price deflation over the past 12 months and many commodities have fallen to their lowest since the start of the Russo-Ukraine war, there has been a very slight reversal of the downward trend since the start of the year. Cause, disruptions in the supply chain due to the problems with the Houthis. As well as the growing geopolitical uncertainty, which is not only related to developments on the Russian-Ukrainian front or to the tragedy in Palestine and its aftermath. The “big moves” on the global geopolitical chessboard and the possibility of changing correlations due to the upcoming elections in Europe and also in the US are fueling several uncertainties and possibly some significant changes in price behavior.

The now looming reversal in interest rate policy by the Central Banks is likely to be a springboard to lower prices, but this will probably happen in the summer or even later.

Regardless of all these developments, the policy of the Mitsotakis government has completely failed to deal with accuracy, which is reflected in the qualitative findings of the polls. It remains to be seen whether it will be reflected politically…