Cyprus inflation partly home-grown in 2008

Inflation in Cyprus was not only caused by high oil prices but also by high local prices, latest figures show.
According to inflation by economic origin, the price of local goods rose by 13.3% in 2008 compared with 3.9% in 2007.
Imported goods on the other hand, fell for a second consecutiveyear, by 0.4% in 2008 compared with a fall of 1.9% in 2007.
Meanwhile, inflation in the services sector rose to 4.5% in 2008, up from 3.6% in 2007.
Of course, the price of local goods will have been affected by an increase in the international price of oil. However, the price of petroleum products rose by 10.5%–not as high as the 13.5% increase in the price of local goods.
Therefore, it seems that at least some of Cyprus is high inflation in 2008 was home-grown.
Some have blamed price-increases on the introduction of the euro in January 2008, which saw rounding up in a range of non-receipted services such as hairdressers and medical specialists. 

Fiona Mullen
www.sapientaeconomics.com