High prices compound squeeze of Cypriot consumers

High prices compound squeeze of Cypriot consumers


By Christos Meliopoulos – Nicosia

Eurostat has come up again with data that reveal the extent of the hardship that many families face in Cyprus in the wake of the financial crisis and the subsequent austerity policies. For another year Cyprus has been found to be one of the most expensive countries in the EU in terms of prices for some basic food and other products.

Along with fellow crisis-hit Greeks, Cypriots pay the most in Europe for dairy products, for instance. Milk, cheese and eggs are priciest in the two Greek speaking countries, while everything else in Cyprus, apart from meat and tobacco, is on average 9% more expensive than in the rest of the EU.

In Limassol social food banks have been receiving a revealingly high number of families and individuals in need of help. Charity officials in the port city point out that the prices are still sky-high in a country not used to high unemployment and with a government somewhat depleted in its ability to protect the weakest, due to the fiscal restrictions imposed by the memorandum of understanding signed with the international creditors. The strong network of community support groups in Cyprus call for the government to exhaust all margins of social sensitivity.

But at the same time, a set of measures should be promoted in order to give families the chance of an easier living in hard times. Politicians have long complained about profiteering from businesses, but it goes without saying that such practices must be condemned and prosecuted. A cap on milk prices was imposed to that direction.

Market professionals point to the need to cut red-tape as much as possible so to reduce unnecessary costs. They also say that the crisis should be used as an opportunity to increase domestic agricultural production, which would lead to lower prices for the consumers. Apart from that, some economists believe that the government should look into lowering VAT. The tax rate on foodstuff is 5% while the general rate has been raised to 18% since January. However, in such times when every cent counts, measures like this one would require a lot of political boldness.