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The long record of inflation shocks in Greece: drivers and impacts

Author

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  • Sophia Lazaretou

    (Bank of Greece)

  • Georgios Palaiodimos

    (Bank of Greece)

Abstract

Global geopolitical tensions have increased considerably in recent years. This has affected the economies primarily via prices on commodities. As a result, global inflation has risen in the aftermath of geopolitical shocks. Given the higher energy and food price shares in the consumer basket, Greek inflation has also risen significantly. Historically speaking, Greece has repeatedly experienced periods of inflationary pressure. Over the past 50 years, global supply-side shocks have triggered cost-push inflation, which was often accommodated by expansionary policies. This paper analyses the historical trajectory of inflationary shocks in Greece, aiming to document inflation trends from the early 1970s to the present. In particular, it identifies the underlying forces that have driven inflation, which in turn entails an examination of both domestic demand and supply shocks, as well as global supply shocks. We find that there is a direct interplay between domestic demand and supply shocks, global supply shocks driven by geopolitical tensions and Greek headline inflation.

Suggested Citation

  • Sophia Lazaretou & Georgios Palaiodimos, 2025. "The long record of inflation shocks in Greece: drivers and impacts," Economic Bulletin, Bank of Greece, issue 61, pages 63-86, July.
    • Handle: RePEc:bog:econbl:y:2025:i:61:p:63-86
    DOI: 10.52903/econbull20256103
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    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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