Cyprus inflation rate will drop below 3% in 2009

The inflation rate in Cyprus will drop significantly in 2009, below 3%, Charilaos Stavrakis, Minister of Finance has said.
Stavrakis noted that this will happen even if the oil prices increase again and reach the last summer’s high levels. He also pointed out that the inflation is expected to reach 4.8-5% by the end of 2008 adding that “its gradual reduction has already begun”.
“The international oil prices have a significant impact on the inflation rate”, Stavrakis said, and added: “Even though, our prediction is that even if the oil prices reach 145 dollars per barrel, the inflation rate in Cyprus will significantly reduce, below 3%”
In addition, Stavrakis stressed that if the oil prices remain at today’s level, namely between 115-120 dollars a barrel, “then we will have a pleasant surprise and the inflation rate will be approximately 2.5%”.
The Cyprus Finance Minister stressed that the Cyprus economy is in a very good position, comparing with many other countries economy, having the second highest growth rate among the EU member states.
“There were some prediction for 6% even 7% inflation rate in August and September”, he said and added that the Ministry’s prediction was that the 5.6%, recorded last July, is the highest inflation rate for the next 2-3 years.
“The figures that the Statistical Service of the Republic receive, show small but significant deceleration on inflationary pressures”, he noted.
Referring to the high cost of pensions in Cyprus, Stavrakis pointed out that one of the Ministry’s priority is to reduce the cost of the public services.
“One of the possible solutions is to change the pension plan for the newly hired employees in the public sector and the semi-government organizations”, Stavrakis concluded.