Cyprus posts second lowest inflation rate in the EU

Cyprus recorded one of the lowest inflation rates in the European Union in March, with the country’s annual harmonised inflation standing at 1.5 per cent, according to figures released on Thursday by Eurostat and the Cyprus Statistical Service (Cystat).

Specifically, the data showed that Cyprus matched the second-lowest inflation rate in the EU, alongside Sweden and the Czech Republic, while only Denmark posted a lower rate at 1.0 per cent.

Across the euro area, annual inflation reached 2.6 per cent in March 2026, rising from 1.9 per cent in February, while in the wider European Union it increased to 2.8 per cent from 2.1 per cent the previous month.

A year earlier, inflation had stood at 2.2 per cent in the euro area and 2.5 per cent in the EU, highlighting a renewed upward trend in price pressures.

Eurostat reported that inflation increased in twenty-three member states, fell in three and remained unchanged in one when compared with February 2026.

The highest inflation rates in March were recorded in Romania at 9.0 per cent, followed by Croatia at 4.6 per cent and Lithuania at 4.4 per cent, underlining significant divergence across the bloc.

In Cyprus, the harmonised index of consumer prices rose by 1.49 per cent year-on-year, reflecting relatively contained inflation compared with the EU average, according to the state statistical service.

On a monthly basis, prices in Cyprus increased by 1.06 per cent between February and March 2026, indicating a short-term acceleration despite the low annual rate.

Moreover, Cystat reported that food and non-alcoholic beverages recorded the largest annual increase at 6.5 per cent, followed by recreation, sports and culture at 5.7 per cent.

At the same time, clothing and footwear prices fell by 5.5 per cent year-on-year, while housing, water, electricity, natural gas and other fuels declined by 4.0 per cent, reflecting downward pressure in key household cost categories.

Compared with the previous month, clothing and footwear rose by 4.0 per cent, marking the largest monthly increase, while food and non-alcoholic beverages climbed by 2.7 per cent.

Looking at broader economic categories, food, alcoholic beverages and tobacco increased by 5.3 per cent year-on-year, representing the most significant upward movement.

In contrast, energy prices declined by 3.7 per cent compared with March 2025, although they recorded a strong rebound on a monthly basis, rising by 4.3 per cent between February and March 2026.

At the euro area level, services contributed the most to inflation, adding 1.49 percentage points to the overall rate.

Energy contributed 0.48 percentage points, while food, alcohol and tobacco added 0.45 percentage points, and non-energy industrial goods contributed 0.13 percentage points.

These figures point to services-driven inflation pressures across the eurozone, even as energy dynamics remain volatile.

For Cyprus, the data suggests a relatively stable inflation environment, supported by declines in housing-related costs and energy over the longer term.

However, rising food prices and short-term energy increases indicate that underlying pressures persist despite the country’s low headline rate.

The combination of moderate annual inflation and notable monthly increases reflects a mixed picture for consumers and policymakers alike.

Cyprus’ position among the lowest inflation performers in the EU highlights its relative resilience, even as broader European inflation trends move upward.