Inflation Has Eased, the Cost of Living Remains

Every month, ELSTAT announces a figure, and every month the same misconception is repeated. When inflation falls from 12% to 3%, prices do not fall — they simply rise more slowly. The difference between the two is the very distance that separates the economic bulletin from the supermarket checkout.

Two Lines, Two Different Stories

The white line is the price level. The cyan one is its rate of change — what we call inflation. Economists monitor the second; the consumer lives with the first.

The blue line bobs up and down, turns to zero, and sometimes even drops below it. The white one almost never does. From January 1959 to July 2026, the price level in Greece multiplied 115 times. There is no point on the graph where the white line returns to a previous level and stays there.

On a logarithmic scale the same line tells a different story: equal vertical distance means the same percentage change, and the curve becomes three straight segments — steep from 1973 to the mid-1990s, a break in the path of convergence towards the euro, almost horizontal from 1998 to 2021. For the last five-year period the two scales are practically identical: the logarithmic scale only stands out when values have changed by orders of magnitude.

What Exactly the Index Measures

The Consumer Price Index —CPI— has been compiled by ELSTAT since 1959 and measures the change in prices of a fixed «basket» of goods and services. The reference year is currently 2020, which is equal to 100. The index for July 2026 stands at 125.1: the same basket that cost 100 euros in 2020 costs 125 today.

Two clarifications that are often omitted. First, the CPI is a weighted average — the weights are derived from Household Budget Surveys and are updated annually. Second, your personal «basket» almost never coincides with the statistical one: a household that spends disproportionately on rent or fuel experiences a different inflation rate from the announced one.

Two Peaks in Sixty-Seven Years

The highest reading of the entire series is January 1974: +33,6%, in the wake of the first oil crisis. This was followed by a whole period in which double-digit inflation was the norm — from 1973 to 1994, there was not a single year in which the average annual rate fell below 10%.

The peak of 2022 —+12.1% in June— it was the biggest shock of the last thirty years, but in historical terms it remains one-third of 1974. The difference is that 2022 found a society that had grown accustomed to two decades of stability.

The One Time Prices Actually Fell

There is a period where the white line actually curves downwards: from March 2013 to mid-2016 Greece was in deflation, with a low of −2.91 TP3T in November 2013. The 2016 price level was lower than that of 2012.

It was not, however, good news. The drop in prices occurred amid a deep recession, with shrinking incomes and demand. The only period in modern Greek history when things became cheaper is also the period when most people had less to spend.

What 2026 Shows

The decline from the 2022 peak was rapid and brought the rate down to an average of 2.5% in 2025. In 2026, however, the trend changed: 5.4% in April, with the average figure for the seven-month period from January to July standing at 3.9%, compared with 2.6% for the corresponding period in 2025. The latest available figure, for July, is 3.4%.

The graph shows both sides at the same time. The cyan line has returned to almost where it was in 2019; the white line, which measures the price level based on January of that year, stands at 125.6. The same basket has become a quarter more expensive in seven and a half years, and nothing on this line suggests a return.

This data alone is not sufficient to characterise a new wave of inflation. Confirmation is needed from the composition of the index — how much is attributable to energy and food and how much to core inflation — as well as from the trend in demand. However, it clearly indicates that a return to the 2% target is by no means a foregone conclusion.

What This Means for the Consumer

The key conclusion is not a forecast but an interpretation. Even if inflation stabilises at 2%, the white line continues to rise — just more gradually. The sense of precision does not stem from the current rate but from the cumulative distance that has already been covered.

The real question, therefore, is not when inflation will fall, but whether incomes are covering the gap that has already accumulated. The CPI only answers the first part.

Sources: ELSTAT, Consumer Price Index (2020=100.0), Tables IV and V, time series January 1959 – July 2026; ELSTAT, CPI Press Releases 2026. The data and correlations do not constitute investment advice.