\n<\/p>\n
Although the days of anguish over supermarket prices are not far behind us, they have taken a back seat. It is services that are now driving inflation, according to an Alpha Bank analysis published Thursday.<\/p>\n
Its biweekly Bulletin on Economic Developments notes that, of the 3.1% annual rise in consumer prices recorded in October, services accounted for 2.6%. On their own, services rose 5.5% year-on-year.<\/p>\n
Looking at inflation from the beginning of the year, services, up 4.2% on average, contributed two thirds of the rise in inflation, which has averaged 3%. This is broadly in line with what is happening in the 20 eurozone countries, where services account for three quarters of the inflation gains, which have averaged 2.4%.<\/p>\n
Thus, rising food prices are no longer the drivers of consumer inflation, as they were in 2022 and 2023.<\/p>\n
Alpha\u2019s analysis notes four main causes of the rise in services-driven inflation:<\/p>\n
First, the rise in demand for services, which impacted their prices. After crashing 6.2% due to the Covid-19 pandemic, private consumption rose 5.1% in 2021, 8.6% in 2022, before easing to 1.8% in 2023. In the first half of 2024, private consumption rose 2% year-on-year. Second, services prices sort of play catch-up with other categories, such as energy and food, which led for very specific reasons, such as supply chain disruption and the war in Ukraine. In 2022 and 2023, when inflation hit 9.3% and 4.2%, respectively, food prices rose 12% and 11.7%, while services rose 4.5% each year.<\/p>\n
Third, the significant rise in wage costs, which affect services, a labor-intensive sector, more than others. According to the Hellenic Statistical Authority (ELSTAT), a strong hike in wage costs began in the second half of 2022 (8.2%), continued throughout 2023 (6.6%) and the first half of 2024 (7%).<\/p>\n
Fourth, the higher weighing of services in ELSTAT\u2019s consumer price index. In 2024, services account for 46.4% of the index, the fifth highest figure in the European Union, where the average is 42.2%.<\/p>\n<\/p><\/div>\n