Fuel, food and housing costs keep inflation high in Cyprus and maintain increased pressure on the cost of living, despite individual reductions observed in some product categories.
The consumer price index for June announced yesterday by the Statistical Service shows that inflation increased at a rate of 3.1%, below the harmonized price index announced by Eurostat a day earlier and was at 4%, compared to June last year.
The data show that countries such as Cyprus, which are more dependent on imported fuels and services, may see a slower de-escalation of prices (or even an increase in some categories), compared to the rest of Europe. The de-escalation in international tensions may help energy prices, but it does not directly pass into the consumer price index.
The Ministry of Finance had recently stated that, although Cyprus is still among the European Union countries with the lowest prices for both unleaded gasoline and diesel, international developments have not yet led to price stabilization and for this reason the Council of Ministers decided to extend the application of the reduced rates of excise duty on fuel until September 17, 2026.
The picture of the numbers is quite burdened compared to 2025, when inflation in June had a negative sign of -0.4% and in 2024 it was 2.96%, compared to 2023. If we go even further back, in June 2023 compared to 2022 inflation was 1.90%.
At a four-year level (2022–2026), the data suggest a cumulative increase in the price index of 7.96%, reflecting the overall cost of living burden. This path can be divided into several phases: a mild increase in 2023, a stronger acceleration in 2024, a temporary de-escalation in 2025 and a re-escalation in 2026.
The evolution of the consumer index translates into continued pressure on household budgets, particularly on basic expenses such as rent, services and daily purchases, with the overall cost of living footprint remaining high, despite the fluctuations of recent years.
Prices are maintained by specific groups of products and services, as a result of which they create inflationary pressures in sectors that directly affect the daily lives of households.
The data announced by the Statistical Service show that the category of petroleum products showed an increase of 21.17% in June on an annual basis, agricultural products showed an increase of 9.01%, the category housing, water supply, electricity, natural gas and other fuels 5.60%, transport 8.26%, food and non-alcoholic beverages recorded an increase of 5.06%, recreation, sports and culture 5.25%, educational services 3.71%, restaurants and accommodation services 3.24%, health 1.13%.
There are also categories of products and services that showed a decline in prices in June, compared to last year. One of the categories is clothing and footwear, with a negative sign of -7.65%, information and communication -3.99%, furniture and decoration, household equipment and ordinary residential maintenance -0.98%.
The remarks of the Central Bank
The Central Bank, in its economic bulletin issued the day before yesterday, states that inflation is expected to increase temporarily within 2026, due to direct and indirect effects from international developments and to de-escalate thereafter.
In 2026, inflation on the basis of the Harmonized Index of Consumer Prices is projected to increase significantly to 3.2% from 0.8% in 2025, mainly due to the economic impact of the war in the Middle East. The main risks relate to uncertainty in the international environment, fluctuations in energy prices and possible more pronounced than expected disruptions in tourism and other exportable services.
The Central Bank also says that the announcement of a preliminary agreement between the US and Iran is a positive development, however, it has not yet been fully finalized, nor implemented and significant parts of it need to be negotiated. In the event that the two sides do not maintain their commitments and the relevant agreement is not implemented, the relevant risks related to disturbances in the energy, commodity and raw materials markets and the course of relative prices remain.
