With the profit margin cap a thing of the past as of July 1, the government, industry, and supermarkets are attempting to move into a new phase of managing inflation. Two months without price hikes, followed by negotiations over the summer to finalize a package of price cuts starting in September.
The “white smoke” that emerged from the meeting at the Maximos Mansion calls for a two-month “grace period” with stable shelf prices and the expiration of the cap on gross profit margins. A measure that the Minister of Development described as “highly interventionist and socialist.”
“We got what we wanted from the price cap,” he said, noting that prices on approximately 2,000 products had fallen and that businesses had committed to not implementing any new price increases.
Development Minister Takis Theodorakos, in remarks made after the meeting at the Maximos Mansion, emphasized that addressing the high cost of living and inflation is a top priority for the government and the prime minister, under whose chairmanship today’s meeting with representatives of industry and supermarkets took place.
As he noted, the de-escalation of tensions in the Middle East has already led to a normalization of international oil prices, a development that is expected to curb the inflationary pressures that had intensified in recent months.
At the meeting, there was a consensus, he said, that this de-escalation must be immediately reflected in product prices. As a first step, it was agreed to fully stabilize prices during the two-month period of July–August, with no new price increases, the Minister of Development stated.
Mr. Theodorakos pointed out that this commitment also applies to approximately 2,000 product codes, whose prices have already been reduced by an average of 6% due to the implementation of the profit margin cap. As he stated, the business community has committed to maintaining these price reductions throughout the summer.
At the same time, preparations will begin shortly so that, starting in early September, a broad package of substantial price reductions on basic food and household items can be implemented as part of a “national social agreement” to protect consumers, he said. As he noted, the price cap measure expires on June 30.
Responding to questions from journalists, the minister said that the government aims for the price reductions to apply primarily to products consumed daily by the average Greek household, rather than simply to a large number of product codes. He noted that similar initiatives had been implemented in the past.
Regarding the extent of the price cuts, he clarified that there is no specific target yet, noting that the priority is for them to apply to basic goods and have a meaningful impact on household budgets. The duration of the measure will be determined upon its announcement.
When asked what would happen if, after the price cap expires, there were price hikes before September, he replied that this is precisely why the current commitments were made and that the government will monitor price developments on a daily basis through the new independent authority, which now has the appropriate tools to control and supervise the market.
In summary, the minister stated that the agreement is based on four pillars. No price increases during the summer; maintaining price reductions on approximately 2,000 product codes; joint preparation by industry and retailers for a package of significant price reductions starting in early September; and the formulation of a national agreement on consumer protection.