The zero VAT measure has come under criticism after the Cyprus Consumers Association reported that prices fell by an average of just 3.76% on the first day of implementation, below the expected 5%.
The association also reported price increases in several products before and after the measure took effect, questioning the Consumer Protection Service’s assessment that its introduction had gone smoothly.
The measure, announced by the Finance Ministry on 30 September, extended the zero VAT rate to five additional categories of essential goods. It came into force after midnight on 11 October, with the first full day of implementation on 12 October.
Price reductions fell short of expectations
The Cyprus Consumers Association monitored prices from 30 September to 17 October. According to its findings, the average reduction stood at 3.76% on 12 October, rising to 4.3% on 13 October and 4.5% on 14 October.
In the days before the measure took effect, average prices for eight products increased by between one and seven cents, the association said.
It also identified three products whose average prices rose by between two and four cents in the three days following implementation.
Supermarkets reported to have applied measure unevenly
The association also examined figures published by the Consumer Protection Service on 15 October. These compared prices recorded on 7 October with those on 14 October.
According to the association’s analysis, four of the 10 supermarkets listed showed some degree of deviation from full implementation of the measure.
It also found that prices for bakery products had not fallen in two supermarkets, despite three days having passed since the zero VAT rate came into effect.
The association disputed the Consumer Protection Service’s public statement that the measure had been implemented smoothly, arguing that the first-day reduction was below 4%, rather than the expected 5%.
Association accuses ministries of inaction
The Cyprus Consumers Association questioned whether the Consumer Protection Service routinely declared that conditions were running smoothly, both in the fuel market and in product pricing.
It stressed, however, that the reported price increases did not constitute a breach of the rules governing prices, as retailers are free to increase their prices at their discretion.
The association also criticised the Finance and Energy ministries, accusing them of failing to ensure that the full benefit of measures intended to support consumers reaches the public.
Findings based on supermarket price data
The association said its conclusions were based exclusively on prices from 49 supermarkets participating in the e-kalathi platform, alongside data processed through the free Smart Kalathi application.
It argued that the authorities had once again fallen short of consumer expectations, calling for greater attention to ensuring that financial support measures translate into tangible savings for households.
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