Why is Greek Inflation at 4%?

[VetLegion]

2.3% in Germany, 2.1% in France.

Greece is in a recession, unemployment is rising, money is being scraped everywhere
to pay off debts... if anything I'd expect deflation.

Where is her inflation coming from? Who is buying... and what?

One can say that ECB's policies are inflationary in the medium or long run (just like the
FED's), but I can't see by which mechanism that'd be materializing in Greece now. The
government does get money from abroad, but that's mostly to repay debt. The population
is not crazy to go into debt now of all times, so banks probably are not expanding either.

Since inflation is always a case of too much money chasing too few goods, and as I said
I can't see why the money supply would be increasing in Greece, can this then be a case
of goods getting fewer? That's also silly, but I'm a bit confused here...

[Al B. Sure!]

Exogenous shocks like increases to the price of imports (like oil) can lead to stagflation.

[Dauphin]

If they've raised taxes, like sales taxes, is that included in the figure?

[Al B. Sure!]

If they've raised taxes, like sales taxes, is that included in the figure?

Higher taxes on businesses in general could have a similar effect

[Dauphin]

You mean taxes raise the cost of doing business? WOW!

[Al B. Sure!]

You mean taxes raise the cost of doing business? WOW!

Oh I see... I can play this game, too...

If they've raised taxes, like sales taxes, is that included in the figure?

You mean it would make goods more expensive which would explain inflation? Wow! You're so smart, Dauphin


You say something real basic and I add on to clarify for VetLegion (who knows how much knowledge he has?) that it's not just sales taxes or anything that directly could increase the price of goods but taxes on business in general... and then you get some compulsion to act smart and mock me? Really? You're not a very smart man, Dauphin.

[Provost Harrison]

Yeah Dauphin, you're not a very smart man. Must be true, Albert Speer says so, and he's never wrong

[C0ckney]

vet, it's basically a combination of rising food and fuel prices globally and an increase in consumption taxes in greece.

[Provost Harrison]

I believe we are facing a similar inflation rate in the UK in fact because of fuel price increases and the impact on transportation and cost of manufacture.

[Dauphin]

Oh I see... I can play this game, too...

You don't play it very well.

[Dinner]

My guess is things like food and gasoline are rising there just like every where else but with credit tight many businesses are forced to either use cash (which most don't have to finance their whole operations) or use higher interest lines of credit to finance stock. Either way less stuff on shelves and what is there is higher in price. I imagine Greece probably also has a less developed rail system and so is more dependent on trucks to deliver goods so they're likely getting hit harder by fuel price increases compared to say Germany which has an excellent rail network.

[Dinner]

If they've raised taxes, like sales taxes, is that included in the figure?

Oh, I forgot about that. Yes, if included in the figure the tax increases would also raise end user costs.