A new wave of accuracy in both fuel and consumer goods prices is expected to bring the rally in international oil prices that has started in the last period of time. In their statements to KYPE, the Consumer Protection Service, the Association of Hypermarkets and the Association of Store Owners refer to the efforts to deal with the phenomenon.
Oil prices continued their rise on Tuesday, with the international benchmark Brent crude reaching $95, the highest since November 2022, while it is estimated that it may break the $100 barrier.
Investors are focused on the prospect of reduced supply in the fourth quarter, after supply from Saudi Arabia and Russia, the biggest OPEC producers, as well as other OPEC members, was extended.
Cyprus, which is heavily dependent on oil imports, is expected to be affected once again, with increases starting in oil and energy prices and possibly extending to other products. Already in August, the downward trend of inflation in the country was reversed with inflation reaching 2,6% mainly due to increases in food and petroleum prices. Moreover, the Harmonized Index of Consumer Prices announced on Tuesday rose to 3,1% in August this year.
The forecasts of the European Central Bank for inflation in the eurozone are also pessimistic, since it considers that inflation will reach 5,6% in 2023, revising its forecasts upwards due to the upward trend in energy prices.
"The trend is clear, there is inflation and increasing trends and they work negatively towards the food sector," the Director of the Consumer Protection Service of the Ministry, Trade, Energy and Industry, Konstantinos Karagiorgis, told KYPE.
He noted that the Agency continues intensive market controls and efforts to propose measures for the benefit of consumers, while adding that the Minister of Energy, Trade and Industry Giorgos Papanastasiou is also working on solutions in this direction.
In this context, as he said, is the "Photovoltaic for all" plan that is expected to be announced within the next period of time, as well as the e-kalathi.
Regarding the measures already in place, last week the Government announced the extension of the zero VAT rate for basic products with the addition of coffee and sugar.
According to the data of the Consumer Protection Service, the prices of about 1700 products in the market have decreased after the imposition of the zero rate of VAT.
Supermarkets: Trying to keep prices low
At the same time, speaking to KYPE, the Executive Secretary of the Hypermarkets Association, Andreas Hatziadamou, said that the upcoming increases are not expected to be large, since prices are already at high levels. He also said that they have not yet been notified by suppliers of any significant product increases.
He also rejected views of the Cypriot Consumers' Association for an artificial increase in prices a few days before the zero VAT rate came into effect.
He stated that neither members of his Association nor their suppliers, wholesalers, experienced such phenomena. He asked everyone to be very careful with the information they present, which as he said "is very far from reality". He also mentioned that the market is not static and there are effects of inflation.
Mr. Hatziadamou noted that their profit margin is small, since out of the 100 euros that go into the cash register, as he said, the profit is around 3 euros and around 5-6 in successful chains. He added that "a lot of effort is being made by Association members to keep prices down, either with specific imports or with private label products," noting that they operate in a highly competitive environment.
However, he said that there were and are some tendencies from some sectors of the supply chain, to increase prices the day after a crisis and while their products were not affected by transport, or they are products that were already in the warehouses. He added that this problem, which was more intense in the past, has eased in recent years due to their own pressures on suppliers, but also to the different mentality of new minds entering the market.
Gas station owners: Need for measures by the Government
Besides, the President of the Gas Station Association, Savvas Prokopiou, said that they expect some further increases in fuel prices due to international prices and increases in the price of oil, which exceeded 20 dollars a barrel in the last two months.
"We've already entered the fourth or sixth increase in the last two months, we've seen increases that have been over 20 cents, so we can't know where the increases will stop," he said.
At the same time, he said that the prices are set by the fuel importing companies and the Department of Consumer Protection of the Ministry of Energy, while the gas station owners themselves cannot significantly influence the price of fuel. As he mentioned, the wholesale prices are based on the prices presented by the importing companies, the state tax and the VAT. Gas station owners, he added, collect those taxes for the state and corporations by averaging about 5 cents in profit before their operating expenses.
Expressing his concern about a possible increase that will affect them as well, since they will be forced to invest additional capital to maintain their stocks and their customers, he proposed that the Government subsidize part of the VAT it receives from fuel.
As he said when the price is around €1,20 the VAT is around 19 cents, while when the price is €1.80 the VAT is around 29 cents.
“So there's a difference of about 10 cents that the state gets extra because of the price increase. This amount of 10 cents could be found a formula so that if the price is above 1,70 it can subsidize the 10 cents of the tax, since it is very difficult to intervene on the VAT," he said. He added that this is a simple decision that helps people psychologically as well, even if the amount is small.
He said that gas station owners adjust their prices within 48 hours usually based on the change in the prices set by the companies.
Source: KYPE
