Inflation in Greece

A short history of inflation in Greece

The Occupation Hyperinflation (1941 to 1944)

Greece suffered one of the most severe hyperinflations in history under German and Italian occupation. The occupying forces requisitioned food and charged the cost of their own occupation to the Greek state, which had no means of paying except the printing press; famine killed tens of thousands in Athens in the winter of 1941. By late 1944 the drachma was worthless and was replaced, and the currency had to be reissued again in 1953.

Inflation and Convergence (1973 to 2001)

Greece had persistently high inflation by western European standards through the 1970s and 1980s, frequently near 20%, driven by budget deficits and repeated devaluations of the drachma. Bringing it down was the condition of joining the euro, which Greece did in 2001, two years after the first wave. Monetary policy has been set in Frankfurt since, and the country's later crisis was fiscal rather than inflationary, producing several years of outright falling prices.

Post-Covid Inflation (2021 to 2023)

In Greece, prices rose fastest in September 2022, at 12.1%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.