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Greeks already spend less on essentials

11 January 2012 / 21:01:38  GRReporter
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According to a study conducted by the agency MARC and commissioned by the Chamber of small producers and traders, Greeks are spending between 45 and 75 euro less per month on buying essential goods. Seven out of every ten households with a monthly income below 1,000 euro said they have stopped buying certain goods from the supermarkets and public markets, in order to keep within their new smaller budgets. The money saved from the reduced consumption is mostly spent on covering the higher utility bills and to pay the extra taxes that were introduced last year.

Six out of every ten say they barely make a living, in order to cover the extra taxes imposed, such as the one on real estate property and the charges for the supplementary funds for the unemployed. These households often also have serious debts to banks, mortgages, consumer loans and credit cards that they are also having difficulties servicing. 64% of the households that participated in the survey make significant savings, while 13.5 percent say they don’t have enough income to cover their monthly expenses and they owe money to the banks or public institutions.

75% of the households in the survey said that they expect their incomes to decrease in 2012. Experts noted that consumption has dramatically declined as the incomes of many households have been trimmed, and not with the outburst of the crisis. Seven out of ten households have cut the list of food products and over 91% have reduced to a minimum costs for clothing and shoes.

Half of all participants in the survey said that they do not have enough funds and they take financial assistance from relatives and friends. Moreover, only 3.7 percent have taken a bank loan to cover their needs over the last year. The drop in consumption has had a particularly strong effect on the catering industry. Over 82% of the households said they no longer spend money to eat in restaurants or to visit taverns with their friends. An increase in the prices is also observed in the alcoholic beverages and soft drinks, hotels, cafes and transport services.

At the same time inflation begins to slowly decrease and according to the official data in December 2011 it has reached a level of 2.4 percent from the 2.9 percent in November of the same year. Reduced consumption has influenced it as well, taking into account that inflation in December 2010 was 5.2%. Nevertheless, prices of goods in the country cannot be decreased much at this time, because a whole bunch of new and old taxes with higher rates were imposed on the manufacturers, which contributed to the artificial increase in the prices for the end users. 90% of the households that took part in the survey rejected the proposal of the government to increase VAT on essentials from 13% to 23%.

Tags: economy markets research poll cuts Greece crisis
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