Housing costs rose by the most in 2005, followed by alcohol, beverages and tobacco, according to the latest consumer price data incorporating December.
However, consumers also enjoyed a steep fall in the price of communications, which helped bring the overall consumer price inflation rate down to 2.6% in 2005, not much higher than the 2.3% recorded in 2004.
According to data from the Statistical Service CYSTAT, the fastest rising category of consumer goods was prices of housing, water, electricity and gas, which jumped by 9.5% in 2005, compared with only 0.3% in 2004.
This was no doubt the result of the sharp rise in international oil prices. More than 95% of electricity in Cyprus is generated by oil.
Tha taxman was also responsible for some of our higher prices, however. Prices of alcoholic beverages soared by 9.4% in 2005, compared with only 1.1% in the previous year, as the government raised excise duties on the ‘sin goods’ ahead of EU membership.
However, there are also some worrying signs about what business is up to. Just as Cyprus is preparing to try to market itself as an international destination for education, it jacked up its prices, by 9.1%, way ahead of average inflation.
In addition, the restaurant and hotel sector, supposedly performing badly because of poor value for money, responded by raising prices to put off even more holidaymakers. Add the appreciation of the Cyprus pound, and in euro or sterling terms those prices rose even higher.
on a more positive note, the entry of new competitors into the supermarket sector may explain why, although food prices did rise higher than average prices, they did not rise as high as other sectors.
Food producers also saw their costs rise as a result of high oil prices.
Two areas where one can loosely say that globalisation is making its mark on the Cypriot consumer clothing and footwear (cheap Chinese T-shirts) and communications.
Where else in Europe can consumers participate in global communications at such low cost?
However, enjoy it while it lasts, as the crazy logic of competition rules means that you have to punish a company that offers the best telecommunications prices in Europe along with a great service to match in my experience.
Fiona Mullen
