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Saturday, April 1, 2023

The reason behind the sharp increases in basic goods-Decreases expected

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Last month's month-on-month increases in staples such as frozen fish and flour are sharp, with authorities sounding the alarm and giving consumers alternatives to choose alternative staples. so as not to increase the cost of the shopping cart, saving money at the same time. 

It is noted that the highest increase recorded by the Observatory of Basic Consumer Goods of the Consumer Protection Service of the Ministry of Energy, is in frozen fish and amounts to 31.4%. In flour, the increase is 6.4%, in frozen molluscs and breaded fish 5.6% and in frozen meat 4.2%. Also, prices for greenhouse cucumbers increased by 10.3% and field cucumbers by 13.6%.

As he explains to REPORTER, the Head of the Competition Branch of the Consumer Service, Aliki Jordanous, the big increases seen in frozen fish, are in salmon and shrimp. “The increase is due to the lack of supply in the international market, which can be corrected in a month. There are various increases per category on some brand-specific products and not apply to all products. However, both frozen fish and frozen meat can be replaced by fresh local ones. So there is a wide range of substitute products on the market for the consumer to choose from. That is, the fact that the price of frozen fish and meat increased, does not mean that the consumer's basket went up, because there is an alternative option that is much cheaper. The observatory actually registers where there is a large increase, so that the consumer does not go to buy the specific ones that have increased”.

In addition, the 6.5% increase observed in flour seems to be because there was a particular decrease in December, when there were offers. “Essentially, the price of flour returned to the price of November, which is much lower than the previous months. However, we are not going to see a particular change in the price of flour, because grain prices are not decreasing”.

The beginning of increases in basic goods

The problems, according to Ms. Jordans, seems to have started in September 2021 with the emergence of the coronavirus and the shortages the market had, which greatly affected the cost of all products, without exception. “Also derailed the increases after the Russian invasion of Ukraine, with incremental increases in fuel, electricity and raw materials, both plastic and glass, for too many products. They were gradual increases that are reflected even today in the prices of the products”.

Nevertheless, several products have seen gradual declines in recent months, with 16 products showing additional declines of 1 to 3% this month. Specifically, in relation to December 2022, in January 2023, sixteen categories show a decrease of up to 3%, such as cold meats, cheeses, sugar, bottled water, fresh meats, fish, cereals, pretzels, cookies, while from the rest categories, moderate increases of up to 1%-3% are recorded in 22 and significant increases in four categories. 

There was also a big decrease, 9.5%, in the price of sugar in January, while the price of fresh potatoes was also reduced, by 13.7%. A large 16% decrease was also recorded by a specific brand of laundry detergent. Individual reductions of 1-5% exist in various products, however there are no general reductions in categories beyond the above.

The assessment that exists, however, according to Ms. Jordanians, “is that if the fuel prices in Europe hold and with the opening of the weather they may fall even more, as well as if the war in Ukraine stops and grain production increases or their price stabilizes, then in theory they should to start seeing declines. However, we must always keep in mind that there are also extraordinary issues, such as VAT, where businesses in January paid increased VAT. So the leeway they had to lower prices was outweighed by labor force increases. Businesses offset increases with decreases and proceed more conservatively essentially. Because if they went on big reductions and ATA came next, we would see a big increase in prices”.

It is noted that the Consumer Staples Observatory has been upgraded in recent years and is a good tool for informing the consumer. It gives a weighted price, taking into account daily prices and volumes rather than a single day's price. They are daily prices and volumes, in a total of 400 points where there are supermarkets, kiosks, bakeries, fruit shops and grocery stores. “So there is a complete picture and so based on the daily prices, it comes up with an average price. This average price for almost all products is higher than last year in the same month”.

Source: www.reporter.com.cy

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