Government uneasy over price increases

Τhe government is concerned about the economic risks arising from price increases, but a spike in inflation is considered temporary, said Finance Minister Constantinos Petrides.

The minister pointed out the need for prudent policies to “have the opportunity to intervene where we can and where we should…there are no easy solutions”.

After receiving the annual report of the Cyprus Economic and Competitiveness Council and asked if he was concerned about the effects of price increases, he said, “of course we are concerned”.

He said inflation has not yet reached past levels and was still considered temporary.

The minister also said other consequences might not be discussed now, such as the need to increase interest rates to curb inflation and the impact on the market or public debt.

“In order to prevent these risks, we need to have a policy that leads to the reduction of public debt because we don’t know how things will be tomorrow.”

Asked about the European Commission’s suggestions to help governments address record energy prices, Petrides said that Cyprus has already subsidized electricity for four months starting in November and did that during the COVID crisis last year.

He also referred to green growth and green taxation promoted by the EU, arguing this will increase fuel prices with all that entails.

“The green transition is not easy, it will also have cost for the consumers, and that is why European planning must be as careful as possible.”

On the expected increase in food prices due to animal feed cost, Petrides said there was a different period of economic growth after the pandemic.

However, inflation, as he said and the current trends, worries not only Cyprus but also every country in Europe.

He added the government would look at the issue of farmer support and market conditions in the short term.

“However, inflation is a global trend, and one cannot control it on a national level.”