The Bank of Greece has revised downwards its inflation forecasts for 2026 and 2027, while a resurgence of inflationary pressures is expected in 2028.
Last year inflation came to 2.9%, well above the initial forecast (2.5%), but below the revised forecast of last September (3.1%), mainly as a result of the large de-escalation recorded in October and November.
The estimate of an inflation de-escalation this and next year is based on the assumption of a further reduction in energy prices, as well as the assumption of a slowdown in the rate of increase in prices for services, which triggered significant inflationary pressures in 2025.
According to the Bank of Greece’s regular inflation publication, the “Inflation Monitor,” the European Union-Harmonized Index of Consumer Prices in Greece is estimated to increase by 2.1% in 2026, while in 2027 it will increase marginally to 2.2%. In 2028 it is estimated to strengthen further, with inflation reaching 2.5%.
The increase in 2027 – and even more so in 2028 – is attributed to the consequences of the implementation of ETS 2 (Emissions Trading System 2) in the EU, which sets limits on fuel emissions not only in large industry, but also in road transport and small industry. Under ETS 2, fuel suppliers will be responsible for purchasing emission allowances and passing on the cost to consumers. Last September, the BoG’s estimates spoke of inflation of 2.6% in 2026 (instead of 2.1%) and 2.4% in 2027.
At eurozone level, the Eurosystem (of which the BoG is a member and whose forecasts are included in the Inflation Monitor) predicts that the Harmonized Index of Consumer Prices will further decelerate in 2026 and 2027 and will reach 1.9% and 1.8%, respectively. In 2028, it is estimated that there will be an increase in inflation to 2% due to the implementation of ETS 2.
On the other hand, it is emphasized that the rate of wage growth is expected to slow down, as the pressures to replace real wage losses weaken. Combined with the recovery in productivity growth, this is expected to lead to a significantly slower increase in unit labor costs.
As for last year, Eurostat announced on Monday the definitive figures for inflation in December, confirming the annual change in the Harmonized Consumer Price Index in Greece at 2.9%.