WRITTEN QUESTION E-2628/02

by Alexandros Alavanos (GUE/NGL) to the Commission

(18 September 2002)

Subject: Soaring prices of goods in Greece

Since the introduction of the euro in Greece and other Member States, there has been a steep and consistent rise in the prices of all basic goods and public and private services, which has led workers and the public at large to protest against their diminishing incomes by boycotting the market.

In his reply to my previous question (E-2639/01(1)), the Commissioner responsible, Mr Solbes Mira, said that, in the short term, the introduction of the euro will have only a marginal effect on inflation while in the medium term it will help make for better control of prices.

1. Has the Commission investigated the causes of the major price rises seen in Greece? Has there been a similar level of speculative price increases in the other Member States?

2. Has it checked whether these price rises are reflected in the consumer price index announced by the Member States?

3. Is it studying proposals such as the one submitted by Italy to issue 1 euro notes? How will it ensure the stability of the incomes of those affected by price rises of a speculative or other nature?

(1) OJ C 115 E, 16.5.2002, p. 136.

Answer given by Mr Solbes Mira on behalf of the Commission

(22 October 2002)

1. In the general framework of the assessment of the economic situation in the Member States and within its macro-economic forecasts exercise, the Commission is regularly monitoring price developments mainly by means of the harmonised index of consumer prices (HICP), which aims at ensuring a sufficient degree of comparison among Member States, and also by means of other price indexes produced at national level. In Greece, in the last months of 2001 and in the first quarter of 2002, an acceleration in the rate of increase was recorded in both the HICP and the CPI (the national consumer price index). Among the factors that influenced price developments in that period, the persistence of exceptionally bad weather conditions caused a spectacular increase in unprocessed food prices and in particular in fresh food and vegetables prices; furthermore, according to some national surveys, upward roundings in goods and services prices, following the effective use of the euro as from 1 January 2002, may have also contributed to increase consumer prices. However, a deceleration in the increase of most indexes is observed in the second quarter of 2002 as a result of some moderation in the underlying indexes; these positive developments might continue in the remainder of 2002, although uncertainty is stemming from external developments, in particular oil prices. In general, the changeover to the euro seems to have led to limited increases in inflation at aggregate level. However, in some Member States, certain categories of consumer products and services did show a higher level of inflation than would have been expected. This phenomenon supported the perception in the public of large inflation increases at an aggregate level.

2. Eurostat receives each month from the National Statistical Service of Greece a set of price indices for consumer goods and services based on harmonised definitions and rules. Eurostat provided specific guidelines on how the Harmonised Index of Consumer Prices should be calculated in the euro-zone at the changeover to the euro. They have been followed by Greece. Eurostat's own published analyses of inflation linked to the changeover are based on data for the euro-zone as a whole and not on data for any individual Member State. Eurostat has not carried out any specific investigations into the causes of recent price increase in Greece or the other individual euro-zone Member States.

3. The choice of values for bank notes is the exclusive responsibility of the European Central Bank. The decision to produce seven denominations ranging from EUR 5 to EUR 500 was taken after four years of detailed discussions in the working party on printing and issuing a European bank note, set up in 1992 by the Committee of Governors of the Central Banks. Eurobarometer surveys since the start of the year show that the notes have been very well received by the public and that there is no desire to alter the range. The possibility of EUR 1 or EUR 2 notes has no real support anywhere other than in Greece and Italy and comes up against strong opposition in some countries (e.g. in France 68 % would be against any such move).