Government mulls price caps on essential goods

The government is examining the possibility of introducing price caps on essential items to stem inflationary trends pushing the cost of living skywards.

During the 2022 state budget debate, Finance Minister Constantinos Petrides said Cyprus is among a handful of countries that alleviate price pressures on consumers by paying the cost-of-living allowance, compensation to farmers, and discounts in electricity rates.

He said the Ministry of Commerce would be looking into the matter, but price ceilings can only be placed on a handful of goods by law, such as milk, bread, and water.

Petrides argued that implementing price ceilings on all goods led to shortages in some countries.

In September, inflation in Cyprus remained relatively high as rising fuel and energy costs kept it at 4.1%, although lower than the 5% in August.

Higher inflation is on the cards as the skyrocketing price of grain makes essential goods across the board more expensive.

The price of grain indented for animal feed has shot up by 50%, while wheat used to prepare bakery products has increased by 30%.

As a result, the overall increase in the cost of animal feed is 70%.

Price increases of grain and wheat products push up the production costs of essential goods such as milk, cheese, eggs, and meat.

Due to increases in the price of durum wheat, bread and pasta are more expensive.

Estimates put the price of bread going up by 15-20%, spaghetti 15-20%, cereals 20%, flour 11%, croissants 5%, biscuits 5%, frozen fruit 10%, frozen fish 13%, detergents 4.5%, coffee 7%, and butter 6%.

The increase in prices is expected to be passed down to consumers at supermarkets and bakeries, although retailers have said they would absorb part of the increase.

President of the Cyprus Retail Association, Marios Antoniou, told Astra radio that supermarkets are ready to absorb some costs, so consumers do not bear the full brunt of the increases.