Bank of Greece sees new inflationary pressures in services and core inflation, with the sectoral index of services recording a 5.6% increase in January and core inflation rising by 4.4%.
These two issues more than offset the benefit from the containment of increases in food prices, resulting in the harmonized index closing above 3%, specifically at 3.1%. Based on the final data for January published by Eurostat, inflation in Greece stood higher in the first month of the year than the European Union average (2.8%) and was included in the top 12.
Where is attributed the rise to 3.1% in January? The energy sub-index closed up 2.6% (from 0.7% in December) mainly due to the large increase in the price of natural gas by 26.5%.
Energy prices
The price of electricity increased further by 5.9% (from 7.6% in December), while liquid fuels (gasoline and diesel) recorded negative inflation of 2.8%. Processed foods decreased by 0.3%, while unprocessed foods recorded an increase of 0.8%.
The main question that now arises is whether the new inflationary pressures will develop into something bigger, thus calling into question the annual targets. Greece’s harmonized index is expected to reach 2.5% in 2025 (down from 3% in 2024), with a further decline to 2.2% in 2026. Excluding the impact of energy and food, it is forecast that this year a price change of 3.1% (down from 3.5% in 2024) should be recorded, with a downward trend to 2.4% in 2026 and 2.2% in 2027.
Especially for the energy sector, a drop of 0.3% is forecast in Greece but a return to positive growth in 2026 (0.9%) and 2027 (6.9%). Based on these forecasts, Greece is estimated to be above the European average this year as well. Thus, the Eurozone is estimated to have a harmonized index of 2.1% in 2025 (compared to 2.5% in Greece), while for 2026 a further decline to 1.9% is estimated (with the corresponding forecast for Greece being 2.2%).
