Record Olive Oil Prices Drive Food Inflation in Greece

A study from the National Bank of Greece found that record olive oil prices were responsible for almost 50 percent of the increase in total food inflation.
By Costas Vasilopoulos
Jun. 12, 2024 15:40 UTC

According to a study from the National Bank of Greece on infla­tion and short-term eco­nomic chal­lenges, olive oil alone accounts for almost half of the country’s food infla­tion.

Food infla­tion is the rate of increase in food prices, usu­ally mea­sured by the Consumer Price Index (CPI), which cal­cu­lates the monthly changes in con­sumer prices based on a rep­re­sen­ta­tive bas­ket of goods.

The study said food infla­tion is slow­ing down in Greece but remains high, reach­ing 5.4 per­cent in April com­pared with the same month one year ago. This is due to the out­sized impact of olive oil in the CPI and the adverse weather that heav­ily impacted the crops in cen­tral Greece last September.

See Also:Farmers in Greece Witness the Impacts of Climate Change After Historically Low Harvest

By com­par­i­son, the annual food infla­tion in the rest of the Eurozone coun­tries stood at 2.2 per­cent in April 2024.

However, if the weigh­ing of olive oil in the Greek CPI were ignored, food infla­tion in the coun­try would then total 2.6 per­cent, the study noted.

The aver­age price of olive oil increased by 29.4 per­cent per annum in 2023 and by 63.7 per­cent in April 2024, adding 0.5 per­cent­age points to over­all infla­tion and account­ing for almost 50 per­cent of the increase in total food infla­tion over the same period,” the bank’s ana­lysts wrote.

According to stan­dard prac­tice, olive oil accounts for 0.9 per­cent of food price rises in Greece due to its high pen­e­tra­tion in Greek house­holds, com­pared to 0.2 per­cent in the rest of the Eurozone coun­tries.

Some mar­ket ana­lysts, how­ever, argued that olive oil’s actual weight in the Greek price index is lower than offi­cially accepted, con­sid­er­ing the change in con­sumer behav­ior caused by the record-high prices of olive oil on super­mar­ket shelves.

In con­fir­ma­tion, indus­try experts have said con­sumers in Greece have started to opt for veg­etable oils instead of olive oil as their main cook­ing oil due to record prices.

Greek con­sumers have reduced their con­sump­tion of olive oil by up to 40 per­cent due to the high prices and have turned to other oils, such as seed oil,” said Manolis Giannoulis, the head of EDOE, the national inter­pro­fes­sional olive oil asso­ci­a­tion.

We still have a long way to go before things get back to nor­mal,” he added.

Greece his­tor­i­cally ranks among the world’s top olive oil-con­sum­ing nations, with a per capita annual con­sump­tion of around 12 liters.

Meanwhile, the Greek gov­ern­ment and the par­lia­men­tary oppo­si­tion have also argued about the effect of olive oil prices on food infla­tion.

Both the cen­ter-right New Democracy rul­ing party and the left-wing Syriza oppo­si­tion have pointed to inac­cu­rate fig­ures – olive oil being respon­si­ble for a 22 per­cent and 4.27 per­cent rise in food prices, respec­tively – that are a far cry from the recorded 50 per­cent, accus­ing each other of mis­in­form­ing the pub­lic at a time when Greeks are grap­pling with the ris­ing food costs in the coun­try.


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