De­fla­tion slows to 1.7 pct in De­cem­ber

Kathimerini English - - Front Page -

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.

White week.

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.

Safe bonds.

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.

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