Cyprus inflation flips over 4% in June

Food prices up 8.5%

Inflation accelerated in June, with the consumer price index rising by 4.2% compared with the year earlier, from 3.9% in May.
The main reason is the cumulative impact of the 5% VAT rate imposed on food and medicines earlier in January year, higher petroleum prices, higher duties on tobacco and higher tariffs for electricity.
Food prices therefore rose by 8.5% compared with the year earlier in June, alcoholic beverages and tobacco increased by 12.4%, and housing, water electricity and gas prices rose by 9.2%.
By contrast, prices relating to consumer spending—clothing, furniture, restaurants and hotels, recreation and culture all rose by around 2% or less.
Compared with the previous month prices in June rose by 0.5.
The Statistical Service said this was mainly owing to increases in the prices of certain fresh vegetables, certain clothing items, electricity and air fares.
Decreases relative to the previous month were recorded in the prices of petroleum products and potatoes.
For the first six months of 2011, the CPI recorded an increase of 3.3% compared with the corresponding period of 2010.

Fiona Mullen
Sapienta Economics Ltd