Filenews 3 July 2024 - by Theano Thiopoulou
Where everyone believed that prices in Cyprus had slowed down and it was only a matter of time before inflation stabilized near 2%, the spring months and June dashed optimism and revived concerns, although some consumer relief measures are still in place.
The most worrying of yesterday's Eurostat data for June is that inflation in Cyprus... It has moved up a category and is now above average inflation in the Eurozone.
From the beginning of 2024 until April, inflation was below the average of the Eurozone partners, but in May and June there was a reversal for the worse and instead of continuing the de-escalation trends, there is an increase in prices every month.
The data released yesterday by Eurostat for the harmonised index of consumer prices give rise to concern at three levels. First, Cyprus is now in the group of countries with the highest inflation, second, the inflation rate is higher than the Eurozone average and, thirdly, the data partially question the performance and adequacy of the government measures in place and which by a recent government decision have been extended until September (reduced or zero VAT) and October (electricity subsidy).
Eurostat said on Tuesday that euro zone inflation in June fell to 2.5%, down from 2.6% in May. In Cyprus, harmonised inflation is estimated to have risen to 3.1% in June compared to June last year, compared with 3% in May, 2.1% in April, 1.6% in March and 2.1% in February and January.
Belgium had high year-on-year inflation (5%) in June, followed by Spain with 3.5%, Croatia and the Netherlands with 3.4%, Austria with 3.2%, Cyprus and Portugal with 3.1%.
At medium levels, harmonised inflation in Greece was 2.4% in June, as in May, in Germany and France at 2.5%, in Slovakia at 2.4%, in Estonia and Luxembourg at 2.8%.
At the bottom rungs, Slovenia had inflation in June of 1.6%, Lithuania 1%, Italy and Finland 0.9% and 0.6% respectively.
At the European level and in the narrow context of so-called core inflation, which excludes volatile food, energy and alcohol prices, and which the ECB focuses on as a more representative indicator of future price trends, the de-escalation trends expected by the market have not been confirmed. Specifically, the core consumer price index in June remained at 2.9% annually, as in May, while the average estimate of analysts expected a slight decline to 2.8%.
And increases due to heat wave
The Cypriot government, as a relief measure and in response to high prices, has decided to extend the measure of graduated subsidy of the electricity consumption charge price for the billed months of July 2024 until October 2024, for electricity bills metered until 31/10/2024, with coverage for residential, commercial and industrial consumers, while for vulnerable consumers the subsidy covers 100% of the increase in its charging price electricity consumption compared to June 2022.
It also decided to extend until the end of September the reduced or zero VAT rate on supplies of certain basic food items, such as bread, milk, coffee, sugar, eggs, meat, vegetables and other items such as baby food and diapers.
However, the very high temperatures prevailing since the beginning of June hit the local production of fruit and fresh vegetables, resulting in an increase in their selling prices and even greater increases are expected, if the increased demand due to the tourist flow is taken into account.
