Cyprus Mail 2 April 2025 - by Souzana Psara
Inflation in Cyprus eased to 2.1 per cent in March, down from 2.3 per cent in February, according to the latest flash estimate from Eurostat.
However, this marks a slight increase from the rate of 1.6 per cent recorded in March of the previous year,
The detailed breakdown of inflation components within the eurozone showed services experiencing the highest annual rate at 3.4 per cent, a decrease from 3.7 per cent in February.
In contrast, the rates for food, alcohol, and tobacco edged up to 2.9 per cent from 2.7 per cent, while non-energy industrial goods held steady at 0.6 per cent.
Energy saw a negative turn in its inflation rate, posting -0.7 per cent, a drop from February’s 0.2 per cent.
Meanwhile, across the eurozone, inflation similarly moderated to 2.2 per cent this March, down from 2.3 per cent in February, closely aligning with the European Central Bank’s (ECB) target of 2 per cent.
This decrease in overall inflation is part of a longer-term inclination since the peak in October 2022, largely driven by the fallout from Russia’s invasion of Ukraine, which had initially pushed energy prices sharply higher.
In response, the ECB has been adjusting its policy from hiking interest rates to lowering them, aiming to bolster the struggling eurozone economy.
Recent measures include last month’s cut in the ECB’s benchmark deposit rate by a quarter of a percentage point to 2.5 per cent.
However, ECB president Christine Lagarde has raised alarms about potential economic disruptions from impending U.S. tariff threats and significant German fiscal expansions.
Investment analysts from Capital Economics said that the continued downtrend in inflation could lead to “further rate cuts at the ECB’s next meeting on April 17, likely by another quarter point.”
The core inflation rate, excluding volatile energy and food prices, decreased from 2.6 per cent to 2.4 per cent.
Economists express concern that the upcoming announcement by US president Donald Trump regarding comprehensive trade tariffs on several countries could reintroduce inflation pressures and hinder economic growth.
