Regarding UK prices...
The UK retail food price index which is of course retail supermarket prices, has shown very little change since 2000, in fact the infamous 'Which' 50 supermarket products, the top 50 foods available in supermarkets in the UK has dropped for the last three years due to fierce supermarket price wars.
This has started to trickle down to eating out as well, there is far more competition between resturaunts and Pubs here now and a Sunday lunch in pubs in Devon has never been this low for years.
Pub chains like Wetherspoons have also driven down the price of eating out and therefore the UK has stabilised, all be it false due to stiff competition regarding eating out prices.
Of course Cyprus is still cheaper, but the difference to Brits holidaying in Cyprus is not nearly as prominent as it was say 5 years ago. The gap is without doubt shrinking, as will the property price gap as Cyprus gets more popular.
The same thing happened in the Costas, they were once dirt cheap but grew more expensive as they became more popular. Invariably, the same will happen to Cyprus as it has to just about all other holiday destinations, it's just the way the tourism market works.
There is far more to going on holiday than cheap prices though, we visit Cyprus not for value but for the beauty of the island and the friendly nature of the Cypriots toward tourists, which the Costas seemed to lose over the years.