To mitigate the effects of soaring costs that have caused inflation to reach its highest rate in more than 40 years, Cyprus will continue to reduce the VAT on power bills and to impose a limit on gasoline prices while increasing pensions.

The package, which is anticipated to cost €103 million, reduces the regular 19 percent VAT on energy bills to a lower 10 percent rate until August 31 and caps gasoline tax at the pump until the same date.

The measures, which were authorized by the cabinet, expand a three-month-old government policy.

A reduced VAT rate of 5% will be applied to power bills for those in needy categories.

According to Finance Minister Constantinos Petrides, the state would enhance pension benefits to 165,000 recipients and provide one-time cash handouts to disadvantaged households.