Deflation slows to 1.7 pct in December
Greece’s deep recession dragged consumer prices down in December for the 10th consecutive month but the deflation rate eased from a record set the previous month, data showed yesterday. Record unemployment, wage cuts and spare capacity in the economy continued to pull prices down, making the economy more competitive but threatening to hurt Greece’s efforts to rein in debt. Consumer prices fell 1.7 percent on an annual basis in December after falling 2.9 percent in November, when it hit its highest level of deflation since monthly records began in 1960. “The slowdown in pace in December was due to special discounts offered in the previous month. The new reading is more in line with the overall trend which is expected to continue for the next couple of quarters,” said Nikos Magginas, economist at Greece’s National Bank. December’s deflation reading was at a slower pace than forecasts by economists who were expecting prices to fall by 2.2 percent. The latest reading brought last year’s average to a fall in prices of 0.9 percent. The economy has been in deflation terrain for 10 months including December. yesterday in Brussels. Greek officials have the task of leading negotiations on behalf of the EU’s 28 member states as they seek a compromise with the directly elected European Parliament on the shape of a central agency for saving or shuttering euroarea banks as part of attempts to cut the link between lenders and sovereigns that fueled Europe’s debt crisis. Striking a deal on the Single Resolution Mechanism is a priority for Greece, which took over the rotating presidency of the EU on January 1, Finance Minister Yannis Stournaras told reporters in Athens last Tuesday. The eventual system should enable decision-making for bank resolution that “should be quick and not overly complex,” BusinessEurope said in yesterday’s letter.
In the next few days Greece’s ministries of Education and Tourism Development are expected to announce the introduction of a midterm weekly vacation for schools in the first week of March, which includes the Clean Monday holiday (March 3-7), in a bid to boost domestic winter tourism. The socalled “white week” follows a request from the tourism industry and is aimed at extending the tourism season, and follows a pattern set in other European countries.
Greek government bonds, the highest-yielding in the euro area, may now be safer than Portuguese securities, according to Insight Investment Management Ltd. The risk of investors having to accept more losses on Greek debt has abated following a writedown on the securities in 2012, Gareth Colesmith, a senior money manager at Insight Investment, said in an interview in London on January 10. The company would consider investing, should Greece proceed with a possible sale of five-year notes in the second half of the year, he said.