Cyprus inflation rises to 3.4% in March–UPDATE

Electricity prices and the 2 percentage point increase in VAT helped to push the consumer price inflation rate up to 3.4% in March, from 3.1% in February.
Prices in the category of “Housing, water, electricity and gas” rose by 14.2% over the year earlier, thanks to a toxic combination of high oil prices, EU-related tariff increases, surcharges to pay for the reconstruction of Vassilikos power station destroyed in July 2011 and the VAT increase.
The smallest increase compared with the year earlier (0.4%) was in clothing and footwear. Low overall price growth in this sector is no doubt the result of weak demand in this retail sector.
However, this sector clearly took advantage of the VAT increase, by jacking prices up by 8.4% compared with the previous month in March.
For the period January-March 2012, the CPI recorded an increase of 3.2% compared to the corresponding period of 2011.
By economic origin, the price of local goods (presumably dominated by electricity) has risen the fastest, increasing by 9.4% compared with the year earlier in January-March. Petroleum products rose by 9.2% whereas services increase by just 1%. The price of imported goods excluding petroleum actually fell by 0.2% in the first quarter compared with the first quarter of 2011.
Meanwhile, the inflation rate using the EU-harmonised consumer price index (HICP) rose to 3.5% in March, from 3.1% in February.
www.sapientaeconomics.com