Household incomes shrank by some 15 percent on average in the second quarter of 2012, compared to the same period in 2011, due to tax hikes of approximately 37 percent in a year and average salary cuts of 10 percent.
Greeks resort to their savings and reduce their spending to make ends meet, as prices of goods and services are on the rise and the government pledges to step up growth-boosting structural reforms to reverse the trend and exit the crisis.
Greece has implemented a tough austerity program since 2010 in return of vital rescue loans from the EU and the International Monetary Fund (IMF) to avoid a chaotic default.
As Athens awaits the next multi-billion-euro bailout tranche by mid- December, the Bank of Greece stressed in a fresh report that the conflict between shrinking incomes and high living cost can be addressed through the implementation of the needed reforms.
The prices remain high due to the lack of competition in key sectors of the economy, the tax hikes and the phenomenon of the grey economy which still supports demand, the report explained.
The opening of closed professions and markets and measures to combat the underground economy and tax evasion could resolve the problem.
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