Consumers in Cyprus will be called to dig even deeper into their pockets as inflation is set to take off once again, following commercial disruption caused by the attacks of the Yemen-based Houthis on freight ships in the Red Sea.
In comments to Phileleftheros daily, the general secretary of the Cyprus Retail Association (PASYLE) Marios Antoniou, said that feedback from major suppliers of the island’s retail sector suggests that a new round of price increases will be hitting consumers towards the end January.
The resurgence of inflation this time round, said Antoniou, is directly linked to Houthi attacks on merchant ships in the Red Sea, just as the retail sector had begun to normalise after the disruption caused by the coronavirus pandemic and the war in Ukraine.
PASYLE’s general secretary noted that increases will mostly concern clothing, footwear, cars, electrical and electronic devices, accessories, some raw materials, and not so much food and other necessities.
His estimates were seconded by Marios Tsiakkis, general secretary of the Cyprus Chamber of Commerce and Industry (CCCI), and the general director of the Federation of Employers and Industrialists (OEB) Michalis Antoniou.
CCCI’s Tsiakkis explained that major shipping companies are forced to send their ships round Africa to the Mediterranean and Europe, with significantly increased freight costs due to more required time at sea, more fuel and other expenses.
Avoid Red Sea
“Many container shipping companies continue to avoid the Red Sea, causing freight rates on Asia-Europe lines to surge by over 100%, with the increase for traders in Cyprus approaching 180%,” according to Tsiakkis.
“Another factor pushing prices upward could be the unloading of products in ports in Italy and Greece before reloading them onto ships bound for Cyprus,” said Tsiakkis, a point also echoed by Antoniou of OEB.
Antoniou warned that, “the increase in container transportation costs and cargo prices will bring turbulence to the domestic retail trade, resulting in significant price hikes”.
He highlighted the complexity of the problem, citing that there are numerous variables that make finding a solution difficult.
In December, the statistical service Cystat published an inflation rate of 1.6%, slightly lower than Eurostat’s harmonised consumer price index, which registered 1.9%.
This places Cyprus as the sixth country with the lowest inflation rate in the Eurozone, notably beneath the bloc’s average of 2.9% in December. This figure represents an uptick from the 2.4% reported in November.
