The cabinet on Wednesday approved a bill giving trade and energy minister Natasa Pilides the power set a maximum gross profit margin for traders in an attempt to stem price gouging as the cost of basic items continue to soar.
Pilides said that the bill would be submitted to the Parliament as soon as possible so that if it’s necessary to employ in specific cases, it can be deployed immediately.
Speaking after the cabinet meeting, she said that imposing price ceilings on the goods themselves is not an effective way of dealing with rising costs for consumers as there are constant price fluctuations in the market due to the ongoing Covid-19 pandemic and the war in Ukraine.
The bill will see that any cap imposed on goods would be on the basis of gross profit instead of a price ceiling, though the minister already has the power to impose those if deemed necessary.
The list of products included in the bill are bread, milk, water, Cyprus coffee, barley and corn.
“Our aim at this stage is to control the spiking prices of goods and raw materials in the market which stem from the pandemic and the war,” Pilides said.
“We want to make sure that that traders do not overcharge for goods and raw materials, in order to contain the spiking costs for consumers. We now have the tools to intervene when we will deem it necessary.”
She added that the bill, which will go through as an amendment to the Maximum Wholesale and Retail Prices in Special Circumstances Acts, 2012 and 2018, provides that decrees can be imposed for up to 45 days.
A statement released by the energy ministry on Wednesday clarified that the bill “expands the scope of the powers of the ministry in order to prevent unfair profiteering by every party involved in the wholesale and/or retail sale of the products specified in the bil, at times when there are disruptions in the global economy and the supply chains of specific products or raw materials.”
Gross profit margin is a metric analysts use to assess a company’s financial health by calculating the amount of money left over from product sales after subtracting the cost of goods sold.
In the attempt to control the maximum gross profit margins, the energy ministry will take into account both international and domestic market conditions.
In issuing a decree, it will also consider the import prices of the products, in case they are not produced in the Republic,
the cost of purchasing the raw materials to produce the goods in the Republic, the cost of producing the products if wholly produced in Cyprus, and consumer protection.