19 Reasons Why Prices Remain High in Greece, When Incomes Plummet

Posted by keeptalkinggreece

Have you ever wondered why we, in Greece, pay htree-times up prices for the same goods and packages sold else where within the European Union boundaries? And thus, despite the austerity measures, the regular and emergency taxes and the permanent decrease of our incomes? Of course, you have wondered and we’ve discussed this severla times here. But now, there are two “official” statements explaining why the prices do not go down. Despite the wages decreases apparently to boost competitiveness.
One statement comes from the Hellenic Federation of Enterprises (SEV) – the biggest employers’ organisation -and  the other comes from the National Confederation of Greek Commerce (ESEE):

Greece’s biggest employers group on Thursday said that rising costs, poor infrastructure, higher borrowing costs and red tape were among the main reasons that the cost of goods in the country has not dropped despite the ongoing crisis.
In a memo sent to the Development Ministry on Thursday, the Hellenic Federation of Enterprises (SEV) set out six reasons for the stubborn prices. These were:
Soaring energy costs as a result of higher energy rates, including a special tax tagged on electricity and gas bills.  The escalating cost of mostly-imported raw materials. Poor infrastructure services. High transport costs which undermine competition. Eextra financial strain caused by the doubling of borrowing costs over the past year, the deterioration of payment terms for imported materials (e.g. packaging materials), the significant increase in taxes, and the long delay in VAT reimbursement. Red tape and a complex administrative structure. (Full article in ekathmerini)

The statement from ESEE states 13 reasons and here they are:

High Value Added Tax (V.A.T.). Transfer pricing among multinationals. Banning imports from cheaper multinationals branches. Distortion in transport and logistics.  Bureaucratic and city planning burdens. Oligopoly with secret agreements between wholesale and retail markets. High rates of profits. Big dependency from the international prices for fuel oil and inability to combat illegal fuel trade. Short-term summer and winter sales. Cuts in labour cost and rentals were replaced by increases in utilities and hikes in loans interest rates. Several problems with the issuing of receipts. State bodies’ concentration to lift obstacles for new enterprises, while it would be more effective to search the enterprises that form the profits. Lack of flexibility from the side of several ministries with the effect that many commerce sectors dropped their prices while food and other basic needs items keep the prices of monopolies. (ERT)

Wait to see where the prices will go when the finance ministry will apply a flat tax of 30% (some claim 35%) to all self-employed and freelancers and thus from the very first revenue euro thus abolishing the tax-free amount.
PS Whew! Now that I know the reasons, I could go light-hearted to the supermarket and buy this wonderful detergent sold  €29 for 70 measures. Unless, its price went down to €28.70 but for 60 measures. as the latest practice of all multinationals here without exception… However, on second thought, I’d choose to stay home and eat a chocolate out of frustration.