Measures to combat inflation must be targeted at the vulnerable groups that are most affected; otherwise, there is a risk that inflation will worsen due to increased demand, officials told the Parliamentary Committee on Trade on Tuesday.
The Minister of Finance, who had been invited to appear before the Committee to discuss the issue of rising prices, informed the Committee that he was unable to attend. In his place, the Ministry’s Director General, Andreas Zachariades, attended; however, he had to leave before the discussion concluded.
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The Committee Chair, DISY MP Nikos Georgiou, stated that it is “extremely difficult” to discuss the issue of accuracy “when the government is not politically represented.” On the other hand, however, he noted that it is the Committee’s duty to discuss the issue, since “the real economy is not the state’s surpluses, but what remains for the citizen.”
The Director General of the Ministry of Finance, Andreas Zachariadis, stated that inflation stems mainly from external factors, affecting primarily fuel and energy and, by extension, everything that can be influenced by them.
“As the Ministry of Finance and the government, we understand the difficulties people are facing. We are striving to respond in a way that helps alleviate the situation,” he said, noting that the measures were initially introduced on a temporary basis but will remain in place in the medium term.
According to Mr. Zachariadis, the government’s measures to address rising prices fall into three categories: immediate short-term measures, reform and institutional measures, and measures to reduce energy consumption.
Regarding immediate short-term measures, the Director General of the Ministry of Finance said that, ideally, these should be strictly targeted. “But because speed of response and ease of implementation are often important, some measures necessarily cannot be targeted,” he said, citing among them the reduction in VAT on electricity, the reduction of excise taxes on heating and transportation fuels to the absolute minimum due to the European acquis, and the zero VAT rate on essential goods.
Regarding reform and institutional measures, the Director-General said that these are the measures that help increase disposable income, citing the increase in student grants, child allowances, as well as tax and pension reforms, the establishment of a minimum wage, and the agreement on the ATA.
Regarding the latest measures aimed at reducing energy consumption, he mentioned the reduction of the VAT on photovoltaic systems to 9%, the “Save-Upgrade” initiative, and plans for electric cars.
When asked by Members of Parliament and the President of the Cyprus Consumers’ Association, Marios Drousiotis, as to whether inspections are being conducted to ensure compliance with the law and whether it has been verified that the measures taken are actually reaching consumers, Mr. Zachariades stated that inspections are being conducted, but “it is not easy to confirm that they are reaching consumers.”
The spokesperson for the Deputy Ministry of Welfare, Nicolas Christoforou, stated that the Deputy Ministry is concerned about rising prices. “We are hoping for measures that will help benefit recipients so that we do not push them further into poverty,” he said.
The spokesperson for the Ministry of Labor and Social Insurance noted that the Ministry supports low-wage earners through the directive on wage adequacy. She referred to the adoption of a national minimum wage and the mechanism for its review. Regarding the extension of the ATA benefit, he noted that, under the directive on adequate minimum wages, an action plan is to be prepared outlining ways to increase union membership rates and collective bargaining coverage.
The Director of the Hellenic Competition Commission, Olga Drousioti, said that it is crucial for the Commission that prices are set under competitive conditions, noting, however, that high prices and uniformity do not in and of themselves constitute a violation of the law, but when combined with other factors may justify an investigation by the Commission. “We do not set prices, nor do we control profit margins,” he said.
An official from the Consumer Protection Agency noted that thousands of market inspections are being conducted. Specifically, he noted that more than 25,000 inspections were conducted in 2025, while more than 12,000 inspections had been carried out by August 2026. She also pointed out that consumers, by making careful choices, can save as much as 25–35% from one supermarket to another.
Central Bank spokesperson Maria Papageorgiou emphasized that any measures must be targeted at vulnerable groups. She noted that the European Central Bank is raising interest rates to curb demand-driven inflation and warned of the risk of hyperinflation. However, he noted that the rise in inflation is also due to supply-side factors, such as rising energy prices—an issue that the ECB’s interest rate hikes do nothing to address.
Emphasizing the need for targeted measures, the CBC spokesperson cited a European study showing that inflationary pressures in 2022 did not affect 31% of Cypriot households or their consumption. “If they are not targeted, we are channeling money to households that cause more inflationary pressures due to increased consumption,” with the consequences worsening further for vulnerable groups.
The Committee Chair, DISY MP Nikos Georgiou, asked what the fiscal cost of the across-the-board measures taken is and whether a reduction in prices has actually been recorded. He also asked how the effectiveness of the e-kalathi system is being assessed.
In remarks made after the committee meeting, Mr. Georgiou stated that “the middle class is shrinking more and more, while low-income groups are seeing their wallets empty before the month is even over. For many workers, as early as the third week after payday, daily life becomes a struggle for survival.”
He added that rising prices are eroding purchasing power and keeping citizens in “financial suffocation,” while “the government seems to be reacting to developments rather than anticipating them, with piecemeal announcements that lack adequate focus, comprehensive planning, and measurable results.”
Mr. Georgiou said that the goal is to call on the government to move beyond general observations and piecemeal announcements toward specific, targeted, and effective social policies. Specifically, he noted that families with three or more children, students, those on low pensions, and all vulnerable population groups need to be supported through targeted measures.
“Surpluses are valuable when they translate into a better daily life for citizens,” he noted.
AKEL MP Yiannakis Gabriel said, during the Committee meeting, that everything starts with fuel and asked whether the Ministry is considering adopting the methodology used by Malta for fuel, which involves fuel subsidies and a state-owned company that supplies fuel to the market at lower prices.
AKEL MP Konstantinos Konstantinou asked what progress had been made on fulfilling the commitment to increase the number of products on e-kalathi by 1,000 and requested measurable data showing whether the measures taken have kept prices in check. He also asked how many inspections have been conducted for price gouging.
In remarks following the committee meeting, Mr. Konstantinou said that inflation is not just a number in a statistical report, but “the electricity bill, fuel costs, the grocery bill, housing and outstanding loans, and the anxiety of a family, a retiree, or a single person about how they will make ends meet each month.”
Mr. Konstantinou noted that the government is not fully utilizing its potential because it does not grasp the extent of the cost-of-living crisis and the public’s need for support. “We consider the existing measures to be inadequate and without any substantial impact,” he said.
He reiterated his proposals for a targeted transportation allowance, the elimination of double taxation on fuel, and a 50% reduction in the cost of vehicle registration for vehicles owned by low- to middle-income households. He also proposed effective market oversight with substantive price controls, the extension of the heating allowance to low- and middle-income families, a permanent 5% VAT rate on electricity, and permanent energy-upgrade programs for solar panels and energy storage, based on income criteria.
ELAM MP Evgenios Hamboulas asked how many people currently receive the heating allowance and how many did in 2012, also inquiring whether the allowance had increased since then. He also noted that an economy that is primarily an importer “cannot easily regulate and control the issue of inflation on its own,” noting that we must examine the economic model we want with specific macroeconomic targets. He also referred to the “unbearable and criminal” 19% VAT on real estate, which, he said, fueled many inflationary trends in the economy.
DIKO MP Chrysis Pantelidis said during the Committee meeting that, to a large extent, the discussions taking place are aimed at creating a certain impression rather than solving the problem, noting that inflation is imported. He highlighted the measures the government has already taken, noting that “if we were to bring one issue before the executive branch, it would be that of tax cuts, recognizing that we are in a period of prolonged and uncertain crisis.” He also raised the issue of support for large families, families with three children, and single-parent families.
Mr. Pantelidis also noted that Cyprus is the fifth-cheapest country in the EU for motor fuel, stating that “it is simplistic to say that we have no public transportation,” adding that the government spends millions every year on public transportation.
DIKO MP Adamos Aspris said in his remarks that the issue of high prices is due to external factors. “Realistically, the government can do only a few specific things, since it does not produce its own natural gas or oil. Our government has already taken measures to address the situation. The government can do only two things: reduce taxes and support vulnerable groups in society,” he said, noting the measures the government has already taken.
Adding that there is room for further support for society, he also referred to the Ministry of Finance’s confirmation that the Minister, together with other countries, submitted a joint request to Brussels at the recent ECOFIN meeting, a joint request to Brussels to allow for further tax cuts and greater flexibility, so that the increased revenue resulting from inflation can be returned to society.
Both within the Committee and in her statements, Alma Movement MP Irini Charalambidou said that the geopolitical realities of the region are a common justification. However, she pointed out that the cost-of-living crisis in Cyprus “did not begin with the war in Iran or the war in Ukraine.”
Referring to “golden passports” and the reduced tax rate for foreign workers—which, she said, led to skyrocketing rents and housing costs— Ms. Charalambidou also highlighted the responsibilities for “strategic planning” regarding energy. She cited €450 million in emissions per year, while placing blame on the former Minister of Energy, noting the unfulfilled plans for Vasilikos and the photovoltaic projects that have been shelved.
“There is no strategic planning. Geopolitical developments clearly have an impact. Our problems began long before that due to poor planning and ministers who did not have the country’s best interests at heart,” he said.
Yiannis Laouris, a member of parliament for Direct Democracy, said that the party submitted five legislative proposals to the committee on the issue of energy. Specifically, he called on the government to recognize electricity as a basic necessity and requested that the production, sale, and storage of electricity be liberalized.
