Macro roundup: Inflation rate plummets

Greek consumer price growth fell to less than 2 percent in June

Inflation in Greece continued its sharp deceleration in June, with consumer prices increasing just 1.8 percent compared with the same month a year earlier.

For many Greek households, this disinflation may not register, as prices are still rising rapidly in supermarkets. Food still prices rose 12.2 percent in June, an acceleration in the rate from 11.6 percent a month earlier.

Core inflation — which strips out both food and drink and energy — slowed to 4.9 percent last month from 6.7 percent in May.

The fact that headline inflation is now below 2 percent feels like it should be symbolic, since that is the European Central Bank’s inflation target. However, the measure that’s relevant to the central bank is the EU-harmonised index of consumer prices, which increased 2.8 percent in June — down from 4.1 percent the month before.

That’s quite a bit lower than the eurozone average of 5.5 percent. Last year’s energy shock in Greece was bigger than the rest of the euro area, pushing inflation higher. The flip side is that energy is responsible for the bigger drop now. Energy prices in Greece fell 22 percent in June, compared with a 5.6 percent fall for the euro area.

---

Higher and higher

The interest spread between new loans and deposits hit a record high in January, and each month since it has gone even higher.

Before January, the spread had never been higher than 5 percentage points. Now 6 percentage points is in sight after it rose another 16 basis points in May to reach 5.76 percentage points.

The average rate on new loans increased to 6.04 percent from 5.85 percent in April, while the average rate for new deposits remains way down at 0.28 percent, a rise of just 3 basis points from the month before.

---

Other data

• Greece’s manufacturing purchasing managers’ index increased slightly to 51.8 in June from 51.5 the month before, according to S&P Global.

  • A reading above 50 signals improving operating conditions.

  • While demand increased among both domestic and external customers, new export orders grew at a slower pace.

• The country’s trade deficit shrank by 11 percent in May compared with the same month in 2022.

  • Import fell 13.6 percent to 7 billion euros

  • Exports dropped 15.4 percent to 4.06 billion euros

---

Next week’s key releases

Monday, July 10:

• May industrial production (Elstat)

Friday, July 14:

• May import price index (Elstat)