By Andy Theocharous*
Driven by curiosity and concern for the daily struggle my friends and family endure back home in Cyprus, I decided to conduct a quick survey on the monthly cost of living. After reviewing and re-running the numbers, I reached a conclusion that is both alarming and unsurprising: it has become nearly impossible for a Cypriot earning a median income to live independently on the island.
A person adhering to a minimal basket of goods barely manages to save three euros per month. Of particular concern is that every single item in this basket has increased in price, while wages have remained largely stagnant in recent years. According to an EU survey, the median gross salary in Cyprus is estimated at 1,700 euros. After deducting social security and general healthcare contributions, a person is left with a meager 1,460 euros. Below, I attempt to analyze and break down the basic cost of living for a single person residing in Nicosia.
Rent (646)
Rental prices in Cyprus have surged in recent years. The latest figures show a 10% increase in the cost of one-bedroom apartments, with median rent in Limassol reaching an eye-watering 1,040 euros. Rents have skyrocketed for three main reasons: (1) The rising cost of construction materials due to global supply chain disruptions, exacerbated by the war in Ukraine. (2) High interest rates, making loans for development projects more expensive. (3) A focus on building luxury high-rises catering primarily to foreign investors rather than affordable housing for locals.
Food (460)
The cost of a basic basket of goods has risen by approximately 5% over the past five years, with items such as red meat and vegetables seeing price hikes of up to 17%. Unlike other sectors, it is difficult to pinpoint an exogenous factor driving these increases—aside from corporate greed. The supermarket industry in Cyprus is highly concentrated, and major retailers have seized the opportunity to raise prices, boosting their revenues at the expense of consumers.
Gas, Transport (207)
The war in Ukraine, tensions in the Red Sea, and inflationary pressures on the U.S. dollar have pushed oil prices up across Europe. The price of crude oil has risen from approximately $60 per barrel pre-pandemic to around $75 today. The U.S. Energy Information Administration expects prices to stabilize as OPEC increases production, but this remains uncertain. The transportation costs calculated also include car insurance and maintenance fees.
Phone, internet (40)
A basic plan from Cyta, including mobile service and home internet (200 Mbps), costs 40 euros. In this sector, Cyprus performs relatively well. According to the agency Surfshark.com, the island ranks third in Asia in terms of internet speed and affordability of telecommunication services.
Electricity, heating (104)
Cypriots pay the second-highest electricity rates in Europe relative to their purchasing power. The reasons for this are fourfold: (1) Cyprus relies on fuel oil—one of the most expensive and volatile energy sources—to generate electricity. (2) The national electricity authority incurs approximately 300 million euros in carbon credit costs under the EU Emissions Trading Scheme, which are passed on to consumers. (3) Cyprus operates an isolated grid, preventing it from importing cheaper electricity from neighboring countries like Greece and Israel. (4) The energy market is largely concentrated among few producers who can set high prices. The government has promised a liberalization of the electricity market since 2017, yet nothing material as of today.
A fake success story
The government frequently boasts about rising GDP and Cyprus’ investment-grade status, as recognized by various credit rating agencies. However, this narrative ignores the harsh reality that Cypriots are struggling to make ends meet. The inability to save, the relentless rise in the cost of living, and stagnant wages create a disheartening and precarious economic environment. On this island, the dream of living independently and comfortably is increasingly becoming a yet impossible endeavor.
*Andy Theocharous is an economist based in San Francisco, California.
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