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Consumers tighten spending amid rampant inflation

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Cypriot consumers are becoming increasingly conservative in their shopping habits, chasing discounts while opting for cheaper products, say retailers.

The change in consumer psychology comes amid the highest wave of inflation in the past 40 years, with inflation hitting a record 9.6% in June.

Consumers are expected to continue being squeezed in the coming months, as the highest inflation rate Cyprus has endured, 10.8%, recorded in December 1981, could be overtaken.

According to retailers, shoppers buy fewer items as they only stick to the essential purchases with impulsive purchases at a minimum.

The executive secretary of the Pancyprian Supermarkets Association, Andreas Hadjiadamou, told Phileleftheros daily that supermarkets see customers make more frequent stops but carry smaller baskets.

He noted that the increased cost of living has made consumers hesitant to buy branded products, opting for lesser-known labels while always looking for offers on the items they are shopping for.

“Consumers are no longer filling up their baskets, shopping fewer items, preferring to make another trip to the supermarket rather than buying something they may not be of urgent need,” said Hadjiadamou.

He is confident that the market will have corrected itself by the end of the year and the Christmas holiday season, with the inflation rate subsiding significantly.

The general secretary of the Cyprus Retailers Association, Marios Antoniou, said shops had noticed consumers changing their habits as early as February when the war in Ukraine broke out.

“Consumers are more conservative in their buys.

“They come in with lists of specific products and labels, indicating that they have done their homework before coming in,” said Antoniou.

Low-income support

Achilleas Demetriades, running in the 2023 presidential elections, has written to Finance Minister Constantinos Petrides, suggesting the government practically supports low-income households.

“Inflation hits disproportionately the low-income classes, and this is why it is imperative to take measures immediately,” said Demetriades.

He calls for the immediate implementation of the minimum wage and allowances for vulnerable groups.

“The government has already made some moves in this direction.

“Nonetheless, the aid mentioned above should be linked to the state’s increased revenue from rising fuel prices.”

Demetriades said authorities should review electricity charges, so that big consumers pay more.

“Reducing VAT on electricity could be targeted to avoid overconsumption.”

He believes the government should make the extra effort to convince Brussels to agree to reduce the VAT rate on some products.

“However, the VAT on the penalty cost on pollutant emissions must stop immediately.”