Taxes push Cyprus inflation up to 3.3% in 2011

The consumer price inflation rate rose to 3.3% in 2011, from 2.4% in 2010 according to the latest figures from the Statistical Service.
The big jump in electricity prices in 2011 was reflected in prices for the category of housing, electricity, water and gas, which rose in 2011 by 10.2%.
Electricity tariffs had already risen in 2011 before the destruction of the main power station following an armaments explosion . In order to pay for the replacement of electricity supply, the government responded with even further hikes in tariffs.
Tariff rises were also behind the 11.1% increase in prices of alcoholic beverages and tobacco prices in 2011. In January 2011 the government was obliged to introduce VAT on food and medicines at the reduced rate of 5%.
The only other category that rose faster than the average was food, non-alcoholic beverages and tobacco, which rose by 4.1%. Retail sales data show that demand for food has held up despite weaker overall demand.
The specific category that recorded the biggest decline in prices was clothing and footwear, which saw prices drop by 0.5%

Fiona Mullen
www.sapientaeconomics.com