Macro roundup: Inflation slows fast
Core also turns down, but food price growth remains in double digits
Greece’s inflation rate is falling rapidly thanks to the effect of energy prices coming off the highs reached in the first half of last year.
Consumer prices in April increased 3 percent from the same month last year, when the headline inflation rate reached its high of 12.1 percent, according to data out this week from the Hellenic Statistical Authority. Crucially, core inflation — the measure central bank policy makers pay closer attention to because it strips out volatile elements — came off its March high.
Core inflation, which excludes energy and food and drink, slowed in April to 6.1 percent from 6.7 percent the month before.
Food prices remained the fastest growing consumer price index component in April, increasing 11.4 percent from the same month a year earlier. While high, that was still a slower rate than March, when food inflation ran at 14.3 percent. The rate reached as high as 15.5 percent in December.
Other data
Industrial production dipped 0.2 percent in March from the same month a year earlier, compared with an increase of 5.2 percent in February
This was down to a 28.1 percent drop in electricity supply
Manufacturing grew 7.8 percent from a year earlier
Greece’s trade deficit shrank 19 percent in the first quarter to 7.22 billion euro from the same period a year earlier
Exports increased 17.8 percent; imports decreased 1.8 percent
In March, the trade balance increased 1.3 percent compared with the same month of 2022, rising to 2.58 billion euros
March exports increased 5.7 percent; imports increased 4.1 percent
Stournaras intervention
Greece’s political party leaders held a televised debate on Wednesday, and many of the headlines to come out of it have focussed on comments made about the wiretapping scandal.
But in terms of economic headlines around the elections, one of the most interesting developments was Bank of Greece governor Yannis Stournaras calling on all the parties to moderate their spending promises in an interview with the financial newspaper Imerisia.
We’ve talked several times in recent weeks about how inflation has given the government something of a fiscal windfall that it’s been able to use to fund pre-election giveaways. This seems to be getting a bit too much for Stournaras,
Stournaras has been making similar noises since last year. However, these are some of his most strongly-worded statements on the subject yet.
Asked how close Greece is to achieving investment grade:
Despite all the progress made so far, we still don’t have investment grade. That’s not very positive. It means we have to be very careful … I think that the ratings agencies are waiting on political developments. They’re waiting for the next government to judge whether to give us the investment grade, mostly on the policy programme of the next government.
After pointing out that the country most needed a stable government to emerge from the election, he continued:
Greece does not have the fiscal capacity to fulfill all these pre-election promises. Of course, I understand that before elections many people say things that definitely won’t be implemented, because if we properly cost what’s being said, they far exceed whatever fiscal space there is.
Next week’s key releases
Monday, May 15:
January-May preliminary central govt budget execution (Finance Ministry)
March import price index in industry (Elstat)