The “inflation of greed” in the Greek market during the pandemic and energy crisis was confirmed on Thursday by data from the Parliamentary Budget Office (PBO).
According to the quarterly report released by coordinator Professor Ioannis Tsoukalas, inflation rose by a total of 16% between the fourth quarter of 2019 and the first quarter of 2024, but its share of profits was 9%, while labor costs were only 4.1%.
“The analysis finds that the contribution of earnings to the cumulative growth rate of deflated GDP through 2024 was more than twice as large as wage costs,” the report noted. In contrast, in the euro area, labor costs make a larger contribution to inflation, at around 10 percentage points.
As the report points out, “companies were able to pass on the increased costs of imports to prices and significantly increase their profits, either due to weak competition or increased demand due to rising household and tourism savings balances.” The PBO notes that this phenomenon was observed in all euro area countries during the first phase of the inflation shock, but with significant differences across member states.
According to figures released from time to time, Greece leads in profit inflation and ranks among the top in the EU. Moreover, a study carried out by the National Bank of Greece last May showed that about 5 percent of the total increase in food prices over the past two years was due to greed flation, that is, an increase in profit margins in the retail market. As further evidence of this phenomenon, the Governor’s Report published by the Bank of Greece in April stated that the profit margins of companies in 2021 and 2022 had increased by a cumulative 15%.
However, the PBO survey shows that “the share of wage costs in inflation exceeded the share of profits last year.” Of the total change in the GDP deflator of 2.8% for the period from the first quarter of 2023 to the first quarter of 2024, the share of labor costs accounted for 1.65%, while the share of profits fell to 0.8%.
