Greece’s annual inflation rate climbed to 3.9% in March, up from 2.7% in February, according to data released by the Hellenic Statistical Authority (ELSTAT).
The increase reflects the economic impact of the war in Iran. Damage to energy infrastructure across the Middle East and disruptions to shipping through the Strait of Hormuz are driving up fuel and electricity costs. Economists warn the full effects have yet to be felt. Higher energy prices are feeding into transport and housing, while pushing up production and distribution costs across the economy.
Energy and housing drive price surge
The sharpest increases were recorded in energy-related categories. Prices for other fuels surged by 27.4% year-on-year, while heating oil rose by 24.6% and diesel by 22.8%. Airfares also jumped by 22%, highlighting broader cost pressures in transport.
Housing costs rose by 5.7%, driven by higher rents, maintenance expenses, electricity and heating oil. Food inflation reached 4.5%, adding to the strain on household budgets.
The data point to a broad-based rise in the cost of living, with essential goods and services becoming increasingly expensive. For many households, this translates into a sustained squeeze on disposable income.
Widespread increases across sectors
Beyond energy and housing, price increases were recorded across multiple categories. Transport costs rose by 8.1% annually, reflecting higher fuel prices and airfare costs. Restaurants, cafés and hotels saw a 6.1% increase, while education costs rose by 2.8%.
Clothing and footwear prices increased by 2.1%, while health-related expenses rose by 1.4%. Even modest increases in categories such as household goods and financial services contributed to the overall inflationary trend.
Some categories offered limited relief. Prices in communication declined by 2.3%, while minor decreases were also recorded in personal care goods.
Monthly spike signals renewed momentum
On a monthly basis, inflation rose by 2.6% in March compared with February. A significant driver was a seasonal rebound in clothing and footwear prices, which jumped by 21.9% as discounts from winter sales unwound.
Transport costs also rose sharply, reflecting higher fuel prices and air travel demand. Housing-related costs increased further, despite some declines in electricity and natural gas prices.
Greece outpaces eurozone inflation
Greece continues to record higher inflation than the eurozone average, raising concerns about competitiveness and purchasing power. While wages have increased, they have not kept pace with rising living costs.
More importantly, inflation expectations appear to be shifting. What was once seen as a temporary surge is increasingly viewed as persistent, a trend reflected in updated forecasts by international and domestic institutions.
The IMF now projects inflation in Greece at 3.5% for 2026, incorporating heightened external risks. Meanwhile, the Bank of Greece has revised its forecast upward to 3.1%, from a previous estimate of 2.9%.
Structural vulnerabilities exposed
These revisions highlight deeper structural vulnerabilities in the Greek economy. Its reliance on energy imports and market dynamics make it particularly sensitive to external shocks.
Global energy prices, influenced by geopolitical developments, are once again feeding into domestic inflation, pushing up fuel and electricity costs. The key risk now lies in how quickly these increases will spread across the broader economy.
Such spillover effects could trigger a more persistent second wave of inflation, complicating the outlook for policymakers.
