Cyprus announces €70 million relief package as economist points to energy costs

Nicosia, Cyprus. The government announced a €70 million cost-of-living relief package in late September amid pressure on consumers and complaints from consumer advocacy groups. Economic observers argue that consumers would face less pressure if the government had acted to lower baseline energy prices.

Tax cuts and financial assistance

The tax on heating oil will be reduced by 5.3 cents per litre from November 1.

The package also includes an extension of electricity subsidies, zero VAT on a wider range of essential goods, reduced VAT on residential photovoltaic systems and additional financial assistance for vulnerable households and residents of mountainous areas.

Days after the announcement, President Nikos Christodoulides said the government had spent “more than a billion” to ease the cost of living. He did not specify the period covered by that figure, leaving its timeframe and accuracy unclear.

Economist links inflation to energy policy

Alex Apostolides, an economist at European University Cyprus, said discussion of the measures should begin with why Cyprus is more affected by inflation than other European countries.

“In August 2026 we had the third highest inflation rate in the EU – 5.2 per cent,” he said.

Apostolides attributed this to “a complete, absolute failure of our green transition” and the country’s reliance on mazut for electricity generation.

He said the current government, whose administration began in 2023, was not the only one responsible but had played a significant role in that failure.

“And I include in this the stalled LNG project in Vasiliko – the cheaper natural gas would have made a difference,” he said.

Comparison with other EU countries

Asked whether the August figure offered an unfair snapshot, or whether the gap between Cyprus and other countries was relatively small, Apostolides said Cyprus’s inflation figures were poor in both absolute and relative terms.