12° Nicosia,
20 June, 2024

Retail trickery? Price hikes before zero VAT stun consumers

Are suppliers gaming the system in Cyprus?

Newsroom / CNA

A recent study by the Cyprus Consumers Association (CCA) has revealed that prices for various essential goods saw artificial increases in the days leading up to the implementation of the zero VAT rate. Marios Droussiotis, the President of the Cyprus Consumers Association, pointed out that these increases were not initially imposed but were prompted by suppliers and traders who, upon learning of the government's intention to implement a zero VAT rate, hastily raised their prices to avoid accusations of post-implementation price hikes.

According to the study, the prices of several essential items exhibited these pre-emptive price hikes. Notably, the reduction in VAT did not appear to be fully passed on to consumers, with fresh milk prices experiencing only a slight reduction. Additionally, prices for evaporated and sweetened milk increased in the days leading up to the zero VAT rate implementation.

Water prices also witnessed increases, with prices surging on the majority of items listed. Eggs saw a price increase of 4 cents per dozen shortly before the zero VAT rate took effect.

Prices for bread went up by 3 to 4 cents on the majority of listed items, while sanitary napkin prices saw a 5-cent increase on one of the four items listed.

Baby products were not exempt from these pre-implementation price hikes. Baby diapers saw increases ranging from 33 to 95 cents on four out of six listed items. Baby food prices also increased by 4 to 37 cents on five out of six items, and baby milk prices surged by 29 to 56 cents on five out of six items.

Droussiotis mentioned that the study aimed to provide a more comprehensive comparison by examining prices before the government's announcement of the zero VAT rate. He noted discrepancies between the Consumer Protection Agency's findings and those of the Consumers Association, emphasizing that comparing prices before the government's announcement revealed a higher percentage of price increases.

Moreover, Droussiotis expressed concerns about the early announcement of the zero VAT rate for coffee and sugar, set to take effect on November 1. He cautioned that such early announcements might lead to price increases for these products, similar to what occurred with other items. He also noted consumer expectations for announcements or positions on fuel and electricity subsidies but found the recent government actions lacking in addressing these critical issues.

Cyprus  |  consumer  |  VAT  |  increase  |  inflation

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