Further rises expected as fuel costs continue to spiral

Another round of price rises on car fuel hit the market on Friday with the average price for unleaded 95 now at €1.81 per litre, with those in the industry warning of further hikes.

An economic whirlwind is hitting consumers amid inflation, which in May rose to 9.1 per cent – levels not seen since the early 80s – and soaring fuel and electricity prices.

There are further warnings that electricity bills could rise by seven per cent from June 1, according to president of the consumer protection association Marios Drousiotis.

Prices at the pump have risen between 40 and 50 cents per litre since the beginning of the year, depending on the fuel.

“One company raised its petrol prices and I’m certain the others will follow, as is usually the case,” president of the petrol station owner’s association Savvas Prokopiou told the Cyprus Mail.

Accordingly, those selling the fuel from the company – linked to about 100 stations – which raised its prices have set unleaded 98 at €1.84 and diesel at €1.88.

“The other companies will likely raise their prices certainly by Monday but likely before that, there’s no chance they won’t,” press spokesman of the petrol station owner’s association Christodoulos Christodoulou told RIK.

He further confirmed that there are weekly rises on the price of fuel, with there even having been cases of three times per week, but again shifted responsibility to the companies importing the product, not those selling it locally.

Asked about concerns over profiteering – as some stations will inevitably have stores left over of fuel purchased at lower prices – Christodoulou said that there are indeed some who are benefiting.

But the underlying message is that there’s not much they can do. Prokopiou said petrol stations follow wholesale prices which depend on global factors, with the stations rising prices accordingly.

Asked about how drivers are handling the changes, whether habits have had to adapt, he said that it’s been a while now that routines have changed.

“Unfortunately, families are having to make difficult decisions and for some there are other more important household goods out there which they must prioritise,” he said.

Prokopiou further added that there is a steady increase in the number of consumers going to the north to fill up, although he could not provide an estimate.

He noted that although the excise tax has been reduced, VAT remains at 19 per cent.

There is a barrage of calls for the VAT to be reduced, although others are concerned that it would deplete the state’s coffers – meaning that the difference would simply have to be made up elsewhere, such as raising taxes on other goods.

Even so, parliament on Thursday passed a government bill extending for another three months reduced tax on motor and heating fuel.

The reduced rates on motor and heating fuel – by 8.4 cents a litre and 5.2 cents a litre, respectively – expired on June 1. Under the extension now, they will continue applying until the end of August.

The bill was fast-tracked through the House finance committee, which held a special session on the matter earlier in the day. At the committee, opposition lawmakers again called on the government to submit data on the state’s revenues from fuel taxes, positing that despite the lower tax rates the state must be earning more because of the sheer increase in the pre-tax price of fuel.

Akel MP Giorgos Loukaides asserted that consumers won’t benefit despite the tax cuts, as fuel prices continue rising, already having reached record highs.

A legislative proposal has been tabled at the House energy committee for a cap on fuel prices.