Summer of Rising Service Prices Looms in Greece

Undoubtedly, one of the key factors driving inflation in consumer prices in Greece is the persistent price increases observed in services. In April, while the overall index in Greece slowed to 2.7%, service prices continued to rise steadily compared to March, reaching a 5.2% increase. Notably, while service prices are also rising across the Eurozone, the rate in Greece remains disproportionately high. For instance, with general inflation increasing by 2.2% in the Eurozone, service prices rose by 3.9%, whereas in Greece, the difference reaches 2.5 percentage points. With the onset of the tourist season, which peaks during the summer months and significantly boosts demand for services, overall inflation is expected to rise further. These significant price hikes in the service sector almost negate any price reductions in other sectors, such as the recent decline in energy costs by 4.9% in April, as well as minor slowdowns in industrial goods and food. The Greek economy’s unique characteristics, heavily reliant on tourism, contribute significantly to these trends. While tourism is a cornerstone of Greece’s GDP, it also acts as a major driver of service price inflation, particularly in hospitality and related sectors. Additionally, many workers in these industries earn minimum wage (e.g., waitstaff), meaning these sectors bear much of the burden of recent wage cost increases. Lastly, the lingering effects of previous years’ energy and food price surges continue to impact service costs, complicating the economic landscape further.