On the one hand, consumers will continue to benefit from the reduced consumption tax on fuel for another two and a half months, but, on the other hand, they have to deal with the very significant increases - in fuel but also in many retail products, especially food - brought month by month by increased inflation. In addition, it was made official yesterday in Parliament that from 2028 fuel prices will rise significantly due to harmonization with an EU Directive on the use of RES in motor and aviation fuels.
In particular, fuel prices will continue to be lower by 8.33 cents per liter until at least November 30, 2026. The measure, which has been in force since last April, would expire on September 17, but will be extended for another ten weeks. A relevant bill will be approved at the next meeting of the Council of Ministers.
This measure was included in the eight measures taken in April '26 by the Government to support the real economy, households and businesses. Until March 31, 2027, the reduced VAT of 5% will be applied to electricity for all household consumers, while by the end of 2026 the zero VAT will be in force on specific product categories.
Harmonisation
Regardless of the development around the increasing rate of inflation in the coming period, the first increases in fuel prices are expected for 2028 due to the harmonization of Cypriot legislation with a European Directive that provides for the admixture of biofuels in motor fuels. That is, increases regardless of other price fluctuations on the basis of the fluctuation of the price of oil in international markets.
During the discussion yesterday of the harmonization bill in the parliamentary Energy Committee, the Director General of the Ministry of Energy, Kyriakos Iordanou, said that the harmonization will bring about fuel costs. The price is forecast to increase initially by 2.5 cents per liter, while in oil the increase will be 7 cents per liter. According to a representative of the Energy Agency, Cyprus has accepted the target of reducing greenhouse gas emissions from transport and, instead of 14.5% that applies to the rest of the member states, will reduce emissions by 11.5%.
To reduce the impact of fuel increases, the Government will proceed with compensatory measures for energy-poor households and vulnerable groups, amounting to €174 million, for the period 2027-2030. An amount of €131 million. will come from European funds and €43 million. from national resources. Sponsorship schemes are expected to begin in 2027.
The compensatory measures concern transport and infrastructure, while income criteria will be applied. At the same time, alternative means of transport, such as walking, cycling and public transport, will be promoted to tackle transport poverty.
