MacroPolis

The last few days have underscored the contrasts in Greece’s economic landscape: record-breaking success on the fiscal front was offset by troubling inflation data that highlighted the strain on households.

In recent years, Greece has earned the trust of markets and the wider investment community. This was reflected in successive credit rating upgrades during 2025 and in the smooth rollout of the Public Debt Management Agency’s (PDMA) modest debt strategies.

The landmark moment came in March 2025, when Moody’s granted Greece investment grade status — the last major rating agency to do so. This upgrade marked the end of a long cycle that began with the debt crisis in 2010 and reached its nadir in 2012, when Greece fell into selective default following a major private sector debt haircut.

Further upgrades followed in 2025, with DBRS, S&P, and Fitch each moving Greece one notch deeper into investment grade.

Market confidence was also evident in January 2025, when Greece’s opening bond issue broke records with more than €40 billion in offers for a 10-year issuance. That record was surpassed last week, as Tuesday’s inaugural 10-year bond attracted over €50 billion in offers, with a spread over German debt of just 61 basis points.

The PDMA raised €4 billion from the transaction, covering half of its annual debt strategy in a single move. Demand was more than six times the total €8 billion target for the year.

The order book drew offers from 338 accounts, 91% of them outside Greece. Fund managers led with 65% of the bids, followed by banks at 22%, while hedge funds accounted for just 4%. Geographically, UK and Ireland investors dominated with 49%, followed by Greece at 9%, and the US and Nordics at 7%.

Yet while international markets show confidence, Greek society remains sceptical. Opinion polls consistently find that around 70% of citizens believe the country is heading in the wrong direction. The government’s economic record is rated poorly, as the cost of living continues to erode household spending power and living standards.

This was reinforced last week by ELSTAT’s release of December’s CPI data, which captured price developments across 2025. Although headline inflation stood at 2.6%, key components revealed deeper concerns.

Food prices rose 3.6%, housing costs climbed 2.8%, and electricity prices increased 4.1%. Specific items saw sharper hikes: meat surged 13.1%, fruit 10.6%, milk and cheese 4.4%, and fresh fish 4%. Rents rose 8.4%, while property maintenance costs increased 6.6%. Eating out was 7.4% more expensive, air travel nearly 12% higher, and package holidays up 7.2%.

ELSTAT’s 2024 budget survey showed food accounts for nearly 21% of average monthly expenditure (€1,725), housing 14.4%, transport 13.3%, and restaurants, cafés, and hotels close to 12%. Within food spending, meat represents 21.3%, milk and cheese 16%, vegetables 14%, and bread and cereals 13.6%.

The survey also highlighted inequality: the poorest 20% of households spend 33.5% of their budget on food, compared with just 12.7% for the richest 20%.

It is clear that the cost of living weighs heavily on Greeks, with the burden falling hardest on financially vulnerable households. Against this backdrop, concepts such as primary surpluses, record bond issuances, and rating upgrades feel abstract — even alien — when daily life is dominated by the struggle to make ends meet.