August inflation eases but food prices continue to rise

The prices of vegetables and greens saw a 41.7 per cent increase in August, the sharpest rise among 18 categories that recorded price hikes, according to the Cyprus Consumers Association.

More reassuringly for consumers, the association also mentioned that 25 product categories saw price drops, while two remained unchanged.

In its August report, the association highlighted that inflation has continued to ease, following July’s 2.1 per cent rise, which had already slowed from June’s 2.7 per cent.  

For August, inflation decelerated to 1.5 per cent, thanks to falling oil prices (down 1.24 per cent) and a 0.6 per cent drop in electricity costs. These decreases helped offset sharp rises in food prices.

However, the food sector still posted a year-on-year inflation rate of 2.38 per cent between January and August 2024.  

This rise was driven by agricultural product prices, which saw a 4.5 per cent monthly increase and a 6.8 per cent rise compared to August 2023. 

According to the association’s August price index, 18 categories saw price increases, with 10 of them rising by more than 1 per cent.

Vegetables and greens saw the sharpest spike, jumping by 41.7 per cent compared to July and now 14.2 per cent higher than in August 2023.

Fresh meat prices also increased by 4.1 per cent, up 2.6 per cent from last year. LPG cylinders followed, climbing by 3.3 per cent (+4.4 per cent compared to last August), while vegetable cooking fat rose by 2.4 per cent, which is 1 per cent higher than last year.

Sugar also saw a modest rise of 2.1 per cent but remains 18.7 per cent lower than in August 2023. Instant coffee prices went up by 1.9 per cent, though they are still 3.7 per cent below last year’s prices.  

Pulses and rice both increased by 1.7 per cent, with pulses now 9.3 per cent more expensive than they were in August 2023 and rice up by 1.9 per cent. 

On the other hand, 25 categories experienced price drops. The most significant decrease was in frozen molluscs and shellfish, which fell by 11.2 per cent, though they are still 22 per cent more expensive than last August.  

Frozen fish, including pan and precooked varieties, dropped by 4.5 per cent (-12.3 per cent compared to last year), while regular frozen fish prices fell by 4.1 per cent (+1.4 per cent vs. August 2023).  

Fresh fish and molluscs saw a decline of 4.8 per cent, now 18.2 per cent cheaper than a year ago. Infant milk prices also dropped by 4.1 per cent, down 4 per cent compared to last year. 

Other notable decreases included laundry detergents, down by 1.9 per cent (-3.0 per cent compared to August 2023), eggs, which fell by 1.6 per cent (+1.5 per cent compared to last year), and oil, which dropped by 1.7 per cent, though it remains 13.3 per cent higher than in August 2023. 

In a price comparison of three supermarkets in Nicosia, the association found a €10.36 difference between the most expensive and cheapest baskets, with prices ranging from €231.57 to €241.93, and the middle basket priced at €240.08.

Notably, consumers are also benefiting from the government’s zero VAT rate on 11 essential products, saving them between €7.20 and €7.40 on a typical €95 purchase, depending on the supermarket. 

Moreover, the association said that it has been actively monitoring the implementation of the zero VAT measure.

An audit on September 18, revealed widespread compliance, with prices for key items like milk, sugar, coffee, and baby diapers maintaining levels seen in May, when the measure was introduced.

Finally, the association said that this initiative has had a positive impact on inflation, helping to stabilise or reduce prices for around 65 per cent of products since May, despite ongoing pressures in the market.