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09 January, 1999
Consumer price inflation dropped sharply to 3.9 percent year-on-year in December from 4.2 percent in November, National Economy and Finance Minister Yiannos Papantoniou said yesterday.
Inflation has been the hardest nut for the government to crack in order to meet its target of entry into economic and monetary union (EMU) by January 1, 2001.
The minister called on industry and commerce to maintain their contribution to the anti-inflation drive begun last year by freezing or lowering prices.
"A drop in prices has now become the responsibility mainly of business, which must contain prices and freeze profits so that inflation may fall to 2.0 percent at the end of 1999, thus ensuring the country's entry into EMU," he told a news conference.
Inflation was likely to continue its decline in the first half of the year, allowing the fall in interest rates to accelerate in the second half.
Mr. Papantoniou said that the New Year augured well for the attainment of EMU targets, but complacency could jeopardize gains so far, especially in inflation and rates on long-term state securities.
In addition, he announced that the rate of increase of government revenue in 1998 was 13.6 percent from the original target of 10.7 percent, resulting in a budgetary surplus of 186 billion drachmas.
The minister repeated that the government would to some extent ease the tax burden in the budget for 2000 with measures that would aid low and middle incomes.
Consultations with interested parties would begin at the end of March, he said.
Inflation drop, budgetary surplus fuel drachma:
Mr. Papantoniou's announcement of December's falling inflation rate and budgetary surplus for 1998 fuelled the drachma against the Euro yesterday after the central bank's daily fix.
The Euro was 324.100 drachmas at the fix and then around 323.75 drachmas in late trade on a flurry of drachma demand.
The central did not move to curb the rampant drachma, only buying around five million Euros at the fix.
The secondary bond market brushed off the news with prices staying flat.
Source: Athens News Agency