President Nicos Anastasiades recognised that rising inflation is an ongoing issue, but said the fact there is a cost-of-living-allowance (CoLA) in Cyprus at least in part compensates loss of income as a result of inflation.
CoLA, or the automatic indexation of wages to the cost of living, is reviewed twice yearly. Not all employers in Cyprus pay Cola.
Amid growing concern about the repercussions of rising prices, especially on the vulnerable, the President is set to discuss the economic impact of the war in Ukraine with ministers on Friday at the Presidential Palace.
Speaking to reporters on Tuesday and asked about the forthcoming meeting, the president said he did not want to prejudge the decisions.
“The situation is indeed difficult, and it is becoming more difficult by the day,” he said.
“We have sensitivities, we have the determination to help but always without ignoring the economic capabilities of the state,” he said.
The issue of inflation is a direct consequence of the war in Ukraine and the response to it needs to be in line with all international developments. Since the war has not yet come to an end, we cannot predict how the situation will unfold, he added.
“People in Cyprus, however, can at least rely on the cost-of-living allowance, which partially makes up for the growing prices. Only two other countries in Europe have the same system,” Anastasiades concluded.
According to data released by the Statistical Service (Cystat) at the beginning of May, inflation jumped to 8.8 per cent in April from 7.13 per cent in March, with the largest price increases being recorded in electricity, up by 39.0 per cent per cent, petrol, up by 32 per cent and agricultural products, up by 8.3 per cent.
Cystat added that the level of inflation currently measured in Cyprus is the highest since 1982, when it reached 9.1 per cent.
Last week Finance Minister Constantinos Petrides said that tackling the rise in prices and the consequent inflation is difficult at the moment due to the ongoing conflict in Ukraine.
He said the government’s intention is to extend the reduction of excise duty on fuel and the reduction of VAT on electricity bills possibly for another three months, depending on the evolving situation and the capabilities of public finances.