Cost of living crisis rages on

Unsettling news for Cypriots consumers as the Cyprus Fiscal Council’s spring report claims the cost of living will continue to rise throughout the year, with fuel prices also staying high.

According to the Fiscal Council, the economy will continue to linger in uncertainty amid a high-risk environment while growing at slower rates than expected.

The report considers that the war in Ukraine will continue; although it does not expect to see it escalate, sanctions against Russia are expected to get tougher.

Fuel prices will stabilize at the end of the third quarter, but prices of other essential goods will not be coming down before the end of 2023.

Rising food and fuel prices will not translate into a new wave of political unrest in countries that are geographically, politically, or economically close to Cyprus, said the Fiscal Council.

It predicted a real GDP growth decline and an upward unemployment trend.

Trends toward stagflation will continue, but real GDP growth is expected to remain positive.

The Ministry of Finance estimates real growth to rise to 2.7% in 2022, while the Fiscal Council estimates it will be closer to 2%.

The Council considers the inflation estimate of 4.5% to be statistically sound, but caution is warranted.

It called for policies to protect employment and targeted protection for low-income groups more vulnerable to price increases.

“At this level, the protection of small and medium-sized enterprises and the social support of vulnerable groups justify an increase in public spending,”

The Fiscal Council monitors the government on its budgetary spending and economic policies.