Filenews 7 July 2023
Headline inflation continues to slow down and has returned to April 2021 levels.
The rate of increase in inflation continues to decline for many products in the Consumer Price Index, but food prices not only remain, but are strengthening compared to a year ago, exacerbating problems for households and family budgets.
In fact, if we take into account the rate of increase in prices, especially in food, from June 2021 to June this year, the amount of the total increase becomes frightening for some foods, especially for consumers with low and small incomes, who did not receive wage increases or Automatic Indexation.
The figures released yesterday by the Statistical Service confirm how problematic the situation remains, as prices on supermarket shelves generally do not fall, keeping the cost of living high.
There is also concern about the visible possibility that the recent abolition of the electricity subsidy for the vast majority of households and the return of the excise tax on fuel to normal levels (which resulted in an increase of 8.3 cents per liter in motor fuels) will bring about a new cycle of increases in items whose production or distribution involves significant costs from the use of fuel and/or electricity.
The pace drops, but...
Nevertheless, inflation in Cyprus in June 2023 fell to its lowest level since April 2021, at 1.9%, from 3% in May and from 9.6% in June 2022.
In June 2021, compared to 2020, year-on-year inflation was 3.1%. But while the general inflation rate has fallen significantly, the food index in June '23 increased to 9.9% year-on-year (compared to June last year), compared to 7.8% in June 2022 (compared to June '21), a period when fuel was more expensive and the energy cost crisis was affecting prices on supermarket shelves.
In June 2021, compared to 2020, the food index was at -0,6%.
This means food prices on average have risen almost 19% since June 2021. Some food items, however, have seen a much larger percentage increase over the past 24 months.
The food and non-alcoholic beverages index increased year-on-year to 10.1% in June 2023, up from 7.9% in June 2022, compared to 2021.
Fuel prices
The picture regarding fuel prices is clearly better compared to June 2022.
According to the Statistical Service, the price of oil fell 25.6% in June compared to a rise of 48.8% last year and a rise of 22.6% in 2021, compared to 2020.
The price of gasoline in June on an annual basis fell 21.9% compared to a rise of 42.5% last year and an increase of 22.6% in 2021.
The price of electricity fell 2.2% compared to a 40.4% rise last year and a 17.2% increase in 2021. The price of LPG fell 9.4% in June year-on-year compared to a 44.3% rise last year.
As of July 1, the reduction in excise duty was abolished, which resulted in increases of 8.3 cents per liter in motor fuel. However, there is a trend of a small decrease (about 3 cents) in the near future, due to decreases in international prices.
The increase in lamb has exceeded 33% since June '21
According to the analysis of the data of the Statistical Service,
– the price of bread fell 1.8% in June this year, year-on-year, compared to a rise of 17.1% last year, a category of food that falls under the zero VAT rate effective May 5, 2023.
- The price of rice rose 11.5%, following a 17% increase in June last year, while the price of pasta jumped 4.9% compared to 15.5% last year.
-Large increases have also been recorded in meat prices compared to June last year. Prices for beef and veal jumped 18.1% in June year-on-year, compared to 9.7% in 2022 and 0.1% in 2021.
- The price for lamb and goat meat rose 26.5% in June year-on-year, compared to a rise of 5.6% in 2022 and 5.2% in 2021. In other words, between June 2021 and June 2023 the increase in the price of lamb exceeded 33%!
- The rise in the price of pork was 8.1% in June compared to an increase of 14.6% last year and -0.4% in 2021. Poultry prices had the smallest increase, 2.1% compared to a rise of 20% in 2022 and -6.4% in 2021.
– The price for fresh milk (whole fat) increased by 6,2%, compared to an increase of 5,7% in June 2022 and a price decrease of 0,3% in 2021.
- The price for fresh low-fat milk showed an increase of 6,8% year-on-year compared to 3,9% in 2022, while in 2021 the change was zero.
- The price for preserved milk rose 25.9% in June, compared to a rise of 7.2% in 2022 and -1% in 2021. Milk falls under the zero VAT rate applied since May.
– The price of yogurt showed an increase of 11,3% in June compared to 3,2% last year and cheese recorded an increase of 11,3% compared to 3,2% in June 2022.
- Egg prices rose 3.8%, compared to a 20.3% increase last year.
– Fruit prices rose 11.9% compared to a price decline of 0.5% last year, vegetables 14.4% compared to a rise of 4.1% last year and a price decrease of 2.7% in 2021.
- The price of potatoes fell 8,3% in June, compared to a price increase of 99,4% last year, compared to June 2021.
- The price of sugar rose 39.6%, compared to a 31.2% rise last year. That is, the increase in the price of sugar in two years exceeded 70%.
– The price of olive oil increased 17% in June this year, compared to an increase of 3% last year (compared to June 2021), margarine and other vegetable fats 21.2%, compared to 19.2% in June 2022.
INTERVENTION
Where did e-kalathi go? [e-basket of food prices]
Around the world, there is talk of the contribution of increased corporate profitability to keeping food and other consumer prices high, even though the prices of energy products and many raw materials have fallen significantly compared to last year. Even the IMF has indicated that a significant part of the inflation is due to pinched prices – to increase profit – by companies involved in the supply chain.
Perhaps the strengthening of competition will impose some reductions. The Government promised e-kalathi so that through the publication of prices and their fluctuations pressure would be put on traders and sellers. Both traders and sellers disagreed, and since then e-kalathi has been ignored.
