WILL FEBRUARY INFLATION BE THE LAST LOW INFLATION? ANXIETY FOR MARCH AND APRIL - Filenews 19/3
Cyprus had three "weapons" before the start of the war in the Middle East: A surplus (€539 million in January), almost zero inflation (0.9%) and low public debt (55% of GDP), which gives it a significant advantage to withstand shocks.
The question is what happens from now on, as a series of negative circumstances have come to add to the geopolitical turbulence, strengthening the environment of inflationary pressures and raising questions about how long there will be resilience for limited inflation.
Yesterday, the Statistical Service of the Republic and Eurostat announced the Consumer Price Index and the Harmonized Price Index respectively, for February. The good news is that Cyprus is the second economy among the countries of the European Union with the lowest level of inflation. In February 2026, it recorded a rate of 0.9%, significantly lower than the average of the Eurozone (1.9%) and the EU (2.1%), while in January and February 2026 it was 0.1% and 1.2% respectively.
In February 2025, Cyprus had a harmonized inflation rate of 2.3% and in one year it saw a significant de-escalation. Denmark had the lowest inflation of 0.5% in February, followed by Cyprus 0.9%, Czech Republic 1%, France 1.1%, Belgium 1.4%, Italy 1.5%, Hungary 1.6%, Sweden 1.7%, Finland and Luxembourg 1.8%, Germany 2%, Bulgaria and Portugal 2.1%, Malta and the Netherlands 2.3%, Latvia 2.4%, Spain, Poland and Ireland 2.5%, Slovenia 2.8%, Greece 3.1%, Estonia 3.2%, Lithuania 3.3%, Croatia and Slovakia 4%, Romania 8.3%.
The Statistical Service announced that annual inflation in Cyprus stood at 0.94% in February 2026. Compared to February 2025, recreation, sports and culture (5,4%) and restaurants and accommodation services (4,9%) showed the largest positive (upward) change. The largest negative changes (decreases) were recorded in the categories of clothing and footwear (-6,2%) and housing, water supply, electricity, natural gas and other fuels (-3,5%).
The question is what happens from now on and what inflation rates are in store for March and April, two months for which there are concerns that they will give a new impetus to inflationary pressures.
On February 28, the US-Israel war against Iran began and the markets reacted immediately negatively, fearing shortages in the supply of energy products and a skyrocketing price of a barrel of Brent and all its derivatives.
Oil prices remain just above a hundred dollars per barrel (yesterday they approached 110 dollars), due to the ongoing war. This in practice means that Cyprus, as a country that imports fuels for both transport and electricity production, will see the next imported cargoes with quite increased prices.
Fuels are one of the most decisive factors in shaping inflation, as they directly and indirectly affect the cost of production and the price of electricity. And then they act as "fuel" for prices to rise on the shelves, causing inflationary pressures. Fuel is necessary for the transport of products and when they become more expensive, the cost of transport (logistics) increases, which is ultimately passed on to the final price of the product, increasing the cost for consumers.
Many industries use fuels for their production process. The increase in energy costs increases the cost of producing goods, which also leads to price increases.
The second source of concern concerns foot-and-mouth disease in sheep, goats and cows and to what extent the livestock crisis will affect inflation, mainly through a possible disruption of the food supply chain. In February 2026, the food index recorded an annual change (increase) of 2.70%, without the incidence of foot-and-mouth disease being intense and without increases in electricity or motor fuels. The killing of large numbers of infected or suspicious animals gradually leads to reduced meat and milk production. The reduction in supply, combined with the stable or increasing - due to Easter - demand, inevitably leads to an increase in prices.
