Food prices in Cyprus are once again rising faster than wider inflation, adding fresh pressure to household purchasing power, according to a report by Trojan Economics, a Cyprus-based firm specialising in competition economics.

The report, written by the firm’s director Panayiotis Agisilaou and partner Stavros Efthymiou, said that public debate around the cost of living often focuses on inflation as measured by the Consumer Price Index (CPI), which tracks the average change in prices across a broad basket of goods and services.

However, it noted that the daily reality for households is shaped more directly by the prices of basic consumer goods, particularly food.

For that reason, Trojan Economics said, looking at the individual components of inflation can give a clearer picture of the pressures facing consumers.

The firm pointed in particular to the ‘Food and non-alcoholic beverages’ category of the Harmonised Index of Consumer Prices, which tracks changes in the prices of basic food items and allows for a more focused assessment of their impact on household budgets.

According to the analysis, a comparison between the general price index and the food and non-alcoholic beverages index up to April 2026 shows that the gap between the two has opened up again.

In the second half of 2024, food prices rose faster than general inflation, before the difference narrowed during 2025.

That changed in the first four months of 2026, when food prices once again recorded a higher growth rate than the general price index.

“This development is particularly important for households, as food is a basic necessity,” the analysis said.

Trojan Economics explained that demand for food is relatively inflexible, both in terms of price and income.

In practice, this means that households have limited room to reduce food consumption, even when prices rise or real disposable income comes under pressure.

As a result, higher food prices often force consumers to cut back elsewhere.

The effect is sharper for lower-income households, which spend a larger share of their budget on basic needs.

From an economic perspective, the firm said the data does not, by itself, explain what is causing higher food prices. Rather, it shows that pressures on basic goods remain stronger than those seen across the economy as a whole.

“The available data do not allow for firm conclusions about the contribution of each individual factor,” Trojan Economics said.

However, it added that the figures confirm that increases in the prices of basic goods continue to weigh on household purchasing power.

The key question, the firm said, is what lies behind the movement in food prices.

Price indices show how prices evolve, but they do not explain why they are changing.

One major factor is cost. International agricultural prices, energy costs, transport costs, weather conditions and supply chain disruptions linked to geopolitical developments all affect food production costs and availability.

These pressures are particularly relevant for Cyprus, given the country’s significant dependence on imported products and raw materials.

However, Trojan Economics said the structure of the market itself also matters.

The intensity of competition, the level of concentration, the distribution of bargaining power between companies and barriers to entry can all affect how prices are formed.

They can also influence the extent to which changes in costs are passed on to consumers.

This becomes especially important in small economies, where the limited size of the market can often lead to higher levels of concentration in some sectors.

At the same time, the firm stressed that concentration does not automatically mean that competition is weak.

Rather, it may affect how a market works and, by extension, how prices are shaped.

Trojan Economics said this explains why several European competition authorities have examined food markets and the wider supply chain in recent years.

These include the Hellenic Competition Commission (HCC), the Italian Competition and Markets Authority (AGCM) and the Dutch Authority for Consumers and Markets (ACM).

The purpose of such reviews, it said, is not simply to decide whether prices are high or low.

Instead, they seek to understand the mechanisms that shape prices, how economic power is distributed across the supply chain, and whether price changes reflect movements in costs and competitive conditions.

Understanding food price pressures, Trojan Economics said, requires analysis that goes beyond headline inflation figures.

It requires a closer look both at external cost pressures and at the way markets function.

In this context, the firm said systematic monitoring of relevant markets and a better understanding of price formation mechanisms are particularly important.

“Effective competition can neither prevent international price increases nor eliminate exogenous cost pressures,” the analysis said.

However, it added that competition can help ensure that consumers benefit as much as possible from market forces and receive the best prices allowed by prevailing economic conditions.