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Inflation persists, prices of key food items remain high

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Inflation persists, prices of key food items remain high

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    The general inflation and food price indices are declining, but households and consumers still feel that prices remain high.

    Most products and services have maintained significant increases in their current prices compared to the last two years.

    Moreover, there is widespread concern that a new cycle of price hikes may follow in a significant part of the market due to geopolitical developments and the actions of Houthi rebels in the Red Sea, threatening supply chains.

    Already the first increases in Cyprus have been recorded in products imported into Cyprus through the new – more time-consuming and costly – transportation process via Africa instead of through the Suez Canal.

    Yesterday's announcement of inflation data by the Statistical Service and Eurostat shows that the harmonized index was at 2% in January, and the consumer price index according to the Statistical Service's measurement was at 1.7% from 1.6% in December 2023 and 7.1% in January 2022.

    The food index is at 3% in January, down from 3.6% in December, according to Eurostat’s methodology, while according to the Statistical Service&#8217 ;s calculations, it is at 2.6%, down from 10.3% in January 2022.

    The issue is when and how substantial decreases in product prices will start to be recorded, so that consumers feel that the numbers showing a moderation in inflation are reflected in their daily lives.

    Even from yesterday’s data, it seems that the containment of inflation does not affect all basic products.

    For example, the continuous increase in the price of olive oil, nearing 50%, is enormous. In January ’24, the price of olive oil increased by 49.2% on an annual basis (compared to January ’23).

    Since November 2023, the Commission had pointed out that the 2023/2024 olive crop year is expected to show an increase in production of just 9% compared to the already low levels of 2022/2023.

    The price of rice increased by 14.8% in January on an annual basis, of pork by 3.1%, of lamb and goat meat by 12.7% (from 22.8% last year, compared to ’22), while poultry prices decreased by 4.3% in January on an annual basis.

    Prices of fresh fruits increased by 18.9% in January on an annual basis, while in vegetables, the increase was only 0.4%. Prices of carbonated water, soft drinks, and juices increased by 7.7% in January, soft drinks by 9.7%, wine by 2.1%, and beer by 6.9%.

    Inflation in the Eurozone

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    In the Eurozone, inflation decreased to 2.8% in January ’24, from 2.9% in December, and is not far from the 2% target set by the European Central Bank to begin the long-awaited relaxation of monetary policy, with interest rate cuts.

    In the Eurozone, food, alcohol, and tobacco prices increased by 5.7%, compared to an increase of 6.1% in December, while non-energy industrial product prices slowed, with their growth rate decreasing to 2% from 2.5% in December. Structural inflation fell to 3.3% from 3.4%.

    The lowest levels of the consumer price index were observed in Finland at +0.7% annually, in Italy at 0.9%, and in Latvia and Luxembourg at +1%.

    Conversely, the highest inflation in January was in Estonia at 5% annually, with Croatia at +4.8% and Austria – Slovakia running at +4.3%. In Greece, from 3.7% in December, the consumer price index slowed to 3.2%.

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