Cyprus extends fuel and electricity subsidies to combat inflation

The Cypriot Ministry of Finance has announced its intention to extend fuel subsidies until the end of November 2026. Government spokesperson Constantinos Letymbiotis confirmed that this measure is part of a broader package aimed at easing the cost of living for households and small businesses amid persistent inflationary pressures. The government is also continuing the reduced excise duty on fuels and has suspended the imposition of the green tax.

Key support measures include subsidies for electricity bills for vulnerable households and small businesses, along with the expansion of beneficiaries for the Electricity Authority of Cyprus (EAC) special tariff 08. Furthermore, the VAT on electricity has been reduced from 19% to 9%, with a further reduction to 5% scheduled to remain in effect until March 2027. Additionally, a zero VAT rate continues to apply to various essential goods.

While these initiatives aim to provide immediate relief, government officials acknowledge their temporary nature. Economic analysis suggests that reducing electricity costs is critical, as energy expenses impact production and operation costs across all sectors, from food processing to retail. Although the Cypriot economy is currently growing with unemployment at 3.6% in the second quarter of 2026, the government maintains that these interventions do not provide a permanent solution to structural economic challenges.