The implementation of the zero VAT rate across seven product categories, as discovered through Consumer Protection Service inspections, was universally applied. According to the Service’s report, this measure resulted in reduced prices and had a highly positive impact on consumers, particularly families with young children.

Among the 45 basic product categories, 17 experienced price reductions, with significant decreases observed in vegetables, milk, bread, eggs, baby diapers, baby formula, and feminine hygiene products.

Conversely, 25 categories witnessed increases exceeding 1%, with notable hikes seen in flour (7%), rice (5%), Cypriot coffee (5%), oil (4.3%), frozen pasta (5.3%), fresh fish (10.6%), and all frozen fish categories (6-37%), as well as breaded meat (2.7%). Minor increases were recorded for toilet paper (3.7%), fabric softeners (3.3%), and laundry detergents (1.1%).

In conclusion, based on the evaluation by the Consumer Protection Service, the data for May suggests that prices have largely remained stable, indicating a sustained inflation rate of 8.5% in food products during the January-May 2023 period compared to the same period last year, as well as the first quarter.

The Consumer Product Price Observatory presents the weighted average prices for 250 basic consumer products (including food and other items), based on quantities and daily prices obtained from 400 retail stores throughout Cyprus during the entire month.

It is important to clarify that the Price Observatories prepared by the Consumer Protection Service serve solely as informational tools for consumers and should not be considered as advisory recommendations. The Price Observatories are not intended to replace individual market research conducted by each consumer, which should be based on personal preferences, data, and needs. Furthermore, they do not aim to endorse specific retail locations or products.

It is worth noting that some of the products included in the Observatory may exhibit qualitative variations that cannot be quantified. Therefore, the Service strongly advises consumers to conduct thorough market research before making purchases.

Meanwhile, given the significant drop in fuel prices compared to a year ago when the measure was implemented, the reinstatement of the consumption tax on fuel is justified, according to Marios Drousiotis, President of the Cyprus Consumers Association. However, Mr. Drousiotis believes that the subsidy for electricity should continue, as the reasons for its implementation still persist.

Mr. Drousiotis noted that the reinstatement of the consumption tax would mean an addition of 8.3 cents to gasoline and diesel prices, and 6.2 cents to heating oil. The Association's position is that the reintroduction of the consumption tax can be considered justified, as gasoline has decreased by 45 cents per liter, diesel by 62 cents per liter, and heating oil by 51 cents per liter since July 12, 2022, when the highest fuel prices were recorded.

However, regarding the potential abolition of the electricity subsidy, Mr. Drousiotis stated that it is not suitable or justified. He pointed out that the cost of subsidizing electricity amounts to €70 every two months for an average household.

"This subsidy cannot and should not be abolished for two reasons. Firstly, electricity prices remain very high, having only decreased by about 7% since July 12, 2022. The reasons for the subsidy have not been eliminated, unlike in the case of fuels," he explained.

"The second reason," he added, "is that we believe the government bears the greatest responsibility for the increased electricity prices. The actions of the government and the authorities over the past decade are responsible for these high prices, as they did not perform their duties correctly, resulting in us now spending €250 million annually on emission fines."

He noted that the Cyprus Consumers Association has been persistently calling for an investigation into the reasons why consumers currently pay hundreds of millions for electricity for the past two years. According to Mr. Drousiotis, 30% of the electricity bill paid by consumers could be avoided.

Savvas Prokopiou, President of the Cyprus Association of Petroleum Retailers, told Cyprus News Agency that an increase of approximately 8 cents in fuel prices is expected after the reinstatement of the consumption tax on fuel. The Association's position, according to Mr. Prokopiou, is that the reduced fuel prices should be maintained due to competition from the north, where prices are significantly lower.

He added that prices should be even lower, which is why the Association supports the continuation of the suspension of the consumption tax on fuel.

It should be noted that recently, the Minister of Finance Makis Keravnos, mentioned that the government will carefully study the issue and decisions are expected in the coming days. The period of reduced consumption tax on fuel ends on June 30.