The Greek government is extending a diesel subsidy and launching a reduced-price scheme for supermarket goods as rising energy costs threaten to trigger a new wave of inflation.
Eurostat, the European Union's statistical office, will announce its initial estimates for August inflation in Greece and the Eurozone at midday. The announcement follows a drop in the Greek harmonised consumer price index to 2.7 percent in July.
The government has deployed two measures to contain prices ahead of the Thessaloniki International Fair, where the prime minister traditionally outlines economic policy for the year. A state subsidy of 10 cents per litre on diesel has been extended, and suppliers and supermarkets have made a voluntary commitment to offer 1,740 items at reduced prices starting today.
Energy cost pressures
While retail prices are being frozen, Greece recorded a 12.1 percent increase in diesel fuel between June and July. This was one of the largest increases across the European Union. A 150 million euro state subsidy allocated for diesel until the end of the year is struggling to keep the price below 2 euros per litre.
Greece showed a 13 percent annual increase in energy costs, compared to a European average of 10.3 percent. With Brent crude oil trading above 90 dollars a barrel, external pressures from the Middle East and Ukraine are passing directly into the domestic market.
Operating costs for businesses will become impossible to absorb through voluntary retail reductions alone if oil prices remain at these levels. The uncertainty is also creating pressure on shipping costs and refined products.
Defence scenarios
The government's economic team is preparing defence scenarios in case international energy prices escalate further before the end of the year. A large portion of the prime minister's announcements will focus on the country's energy defence.
The government is keeping a reserve of between 500 million and 800 million euros for 2027 as a final contingency measure.
