Will the Drop in US Dollar Affect Tourism in Greece?

	Spiraling Prices

Product	Pre-Euro Price (Jan. 2002)	Current Price (June 2003) in Euros	% Increase of products and services	% Total Increase w/ 20% drop in US dollar
cigarettes	2.20	2.50	14.0	34.0
sm. bottle water	0.29	0.50	72.0	92.0
can of coke	0.44	0.60	36.0	56.0
frappe	2.93	3.30	12.0	32.0
souvlakia	1.03	1.50	45.0	65.0
tiropita	0.52	0.90	73.0	93.0
mixed drinks	5.87	7.00	19.0	39.0

The increase in the past year for many products and services has averaged about 39% for those paying with Euros and 59% with Euros converted from US dollars.

Higher prices because of a national switch to the Euro from the drachma, combined with a significant drop in the value of the dollar, pose not only a great challenge to tourism in Greece, but also may have a negative impact on exported Greek products, making them more expensive in comparison to similar EU products. If terrorism or other military actions threaten the region, the price of crude oil could also soar; this would retest the recent twelve-year peak price of oil and contribute to further inflation and higher prices, making that souvlaki or mixed drink even more expensive. Nevertheless, economists are predicting that inflation in Greece will ease in the coming months as fresh, cheaper agricultural products come back into the market, recovering from the recent bad weather.

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(Posting date 23 June 2003)