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A wave of price increases for the essential products and services in Greece

03 January 2011 / 13:01:03  GRReporter
3068 reads

New Year - new prices! This seems to be the wish of the economic team of the government to the consumers in Greece as in the very first days of 2011 the prices of a number of basic products and services will begin to raise.

According to the release of the Ministry of Finance the low VAT, which includes products and services will jump from 11% to 13%, the much lower one will increase from 5.5% to 6.5% and unchanged remains the VAT of 23%.

These increases will start from the shelves of the supermarkets, where essential products are expected to significantly increase in price. According to some studies every household will have to spend at least an extra 168 euros per year just to buy food.

Prices for transport, health services, entertainment and repairs are also increasing. Change in value of lower VAT by two per cent will further exacerbate the family budget because it includes also books and publishing services.

An increase is also expected in electricity prices. The National Electricity Company (DEI) announced price rises within 3-11%. The measure affects all consumers with low power consumption, i.e. over 5.5 million households. From this change will benefit over 1.3 million companies as the company announced price reductions in the electricity for the so-called "massive consumers".

An increase of 1.2 percent is also foreseen in the monthly bills for natural gas. In the process of revising are also the charges of the water supply company (EYDAP) and the Telecommunications Company (OTE).

The increase of VAT will lead to a significant increase in the prices of urban and interurban transport. Greek Railways (OSE) announced increases of almost 100% in tickets for trains in an attempt to save about 34.1 million euros. An example of the drastic increase is the ticket for the route Athens - Thessaloniki, which will jump from 36.30 euros to 55.20 euros. Thus the prices of trains will become approximately the same as the prices of coaches. Along with this, international routes of TRENOSE were cut as well as the trains, which were until now traveling in the areas of Western Macedonia and the Peloponnese. An increase of over 50% is expected in prices of suburban train. Tickets for public transport in Athens will also increase in price from 1 euro to 1.30 euros, prices of monthly cards will also raise.

The increase in VAT from 11% to 13% will cause an increase in prices for taxi services. The minimum fee will reach 3.16 euros, while prices for a kilometer run will reach 0.68 euros day rate and 1.19 euros night rate. From the union of taxi drivers (SATA) was made a request to the Ministry of Transport not to increase VAT on transport services and to include them under the low coefficient, which however was not accepted by the department. The prices of taxi services were increased for the last time in July 2010 with their inclusion in the VAT rate of 11%.

The wave of price increases did not pass by the road tolls. From midnight on 2 January concession companies which operate on two of the main roads in Greece announced increases in fees. In this way, people traveling by car from Athens to Thessaloniki pay over 25 euros for road tolls in one direction only.

Raising the rates of VAT will affect mostly the low-income consumers because it includes essential products and services for which this category of citizens spends most of its revenues.

Products that will be affected by the increase in VAT from 11% to 13% include: meat, fish, milk and dairy products, eggs, honey, soft drinks, flowers, vegetables, nuts, fruits, coffee, tea, cocoa, spices, salt, grain, flour, sugar, olive oil, soybean oil, sunflower and corn oil, confectionery materials, water, food for livestock, fertilizers, firewood.


Tags: economy increase in VAT price increase of goods and services
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