Cyprus government unveils €70m aid package amid rising prices — Cyprus Mail
At the end of September, the Cypriot government presented a €70 million package of measures to mitigate the rising cost of living. From 1 November, the tax on heating fuel is planned to be reduced by 5.3 euro cents per litre, from 7.4 to 2.1 euro cents. The package also provides for the extension of electricity subsidies, a zero VAT rate for a broader range of essential goods, reduced VAT on household photovoltaic systems, and additional assistance for vulnerable households and residents of mountainous areas, reports Cyprus Mail.
Energy costs and inflation
Alex Apostolides, an economist at the European University Cyprus, linked the country’s high inflation rate to energy costs. According to him, inflation in Cyprus stood at 5.2% in August 2026, the third-highest figure in the EU. In the economist’s view, one factor is the dependence of electricity generation on fuel oil, as well as delays to the LNG project in Vasiliko.
For comparison, Apostolides cited Malta, where inflation in August was 2%. Both island states import energy resources, but Malta also uses imported natural gas for electricity generation, which, according to the economist, reduces its energy costs.
Savings and assessments of support
According to the publication, an average household in Cyprus uses between 350 and 400 litres of heating fuel during the winter. At a price of around €1.7 per litre, filling a 350-litre tank costs slightly more than €600. Cyprus Mail’s calculation shows that after the excise tax cut, savings for this volume will amount to about €32 for the entire winter season.
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President Nikos Christodoulides stated that his administration had spent more than €1 billion on measures to reduce the cost of living. At the same time, Cyprus Mail calculated the amounts of support packages listed on the presidency’s official portal since October 2023: they total €545 million. The publication noted that the portal does not contain a total expenditure figure of €1 billion, while the Finance Ministry did not respond to its inquiry about this amount.
Criticism of the targeting of aid
Apostolides also questioned the definition of the measures as targeted. In his view, reduced VAT on certain goods and the tax break on heating fuel are available to all buyers, not only to people with low incomes. Economist Savvas Savvides, for his part, stated that the authorities are responding to the consequences of the problem, while its causes are deeper.
This year’s tax reform raised the tax-free income threshold from €19,500 to €22,000. According to Cyprus Mail, a person earning €25,000 saves €500 per year as a result, but Apostolides believes inflation quickly offsets this effect.
