MINISTER of Commerce and Industry, Antonis Paschalides visited several supermarkets earlier in the week in order to check out prices and see how the retail business was doing. He saw a ‘sluggishness’ in the market, saying that consumers were restrained and very cautious about spending, which had had an effect on the retail business.
He attributed the sluggishness to “the existence of a negative psychology, created by the daily bombardment of consumers with reports that we are on the brink of destruction.” Paschalides said that people and shops should be left alone and that competition would ensure that everything would go well, eventually.
It is rather patronising attitude by the minister showing total insensitivity to the financial problems being faced by many households. Not everyone in Cyprus works for the public or semi-governmental sectors, the employees of which are guaranteed hefty pay-rises every year, not to mention job security.
It is perfectly understandable for people to be cautious and restrained about their spending in these economic conditions. Businesses are obviously not doing well – there may be more redundancies next year – banks are set to tighten credit and all essential items and services (food, medicine, electricity, heating oil, water) will be more expensive in 2011.
In these conditions cautious spending is a very sensible choice. Was the minister advising people to ignore the bleak economic outlook and spend mindlessly? The irony is that he has also contributed to the negative psychology, with his continuous talk about profiteering by retailers.
On Tuesday he announced that he would put together a task force to monitor prices and ensure there was no profiteering. How should the consumer react when the commerce minister announces plans to publish price lists of essential items as part of his battle against profiteering? He is not exactly sending out a positive message to people by implying that they’re being overcharged.
Not that a positive message from a minister would have made a big difference anyway. We are going through the worst-ever recession, businesses are struggling, private sector jobs are not as secure as they used to be, the government is under pressure to sort out public finances, bank credit has been tightened and a new wave of price rises is in the offing. No rational consumer would be spending money like they were doing three years ago at the height of the boom.
Of course the market will be sluggish and we very much doubt that the minister’s prediction, that things would soon improve, will prove correct.
