Why isn’t Cyprus’s cost of living coming down?

Economy cost-of-living crisishousingHousing crisisinflationTop News Why isn’t Cyprus’s cost of living coming down? Market Inflation Relevant News Why isn’t Cyprus’s cost of living coming down? 3 July 2026 Police secure footage, key witness accounts in Limassol wife shooting case 3 July 2026 Conflict-of-interest concerns raised over Mafia State investigators 3 July 2026 Theano Thiopoulou 3 July 2026 FacebookXWhatsAppEmailPrintViber Fuel, food and housing costs are keeping inflation high in Cyprus and maintaining pressure on the cost of living, despite price falls in some individual categories. The headline numbers Cyprus’s consumer price index for June, released yesterday by the Statistical Service, shows inflation rising at a rate of 3.1%, lower than the harmonised index Eurostat announced the day before, which stood at 4% compared with June last year. The data suggest that countries such as Cyprus, which rely more heavily on imported fuel and services, may see slower disinflation, or even price increases in some categories, compared with the rest of Europe. Easing international tensions may help energy prices, but this does not feed through directly into the consumer price index. The Finance Ministry recently said that while Cyprus remains among the EU countries with the lowest prices for both unleaded petrol and diesel, international developments have not yet led to price stabilisation. As a result, the Council of Ministers decided to extend reduced excise duty rates on fuel until September 17, 2026. How this June compares with previous years This year’s figures represent a heavier burden than 2025, when June inflation was negative, at -0.4%, and than 2024, when it stood at 2.96% compared with 2023. Going further back, inflation in June 2023 compared with 2022 was 1.90%. Over the four years from 2022 to 2026, the data point to a cumulative rise in the price index of 7.96%, reflecting the overall burden on the cost of living. This trajectory can be broken into phases: a mild increase in 2023, a sharper acceleration in 2024, a temporary easing in 2025, and a renewed rise in 2026. The trend in the consumer price index translates into continued pressure on household budgets, particularly for essential spending such as rent, services and everyday purchases, with the overall cost-of-living burden remaining high despite fluctuations in recent years. What’s driving prices up Specific categories of goods and services are keeping inflation elevated, creating price pressure in areas that directly affect households’ daily lives. According to the Statistical Service, petroleum products rose 21.17% year-on-year in June, agricultural products rose 9.01%, housing, water, electricity, gas and other fuels rose 5.60%, transport rose 8.26%, food and non-alcoholic beverages rose 5.06%, recreation, sport and culture rose 5.25%, education services rose 3.71%, restaurants and accommodation services rose 3.24%, and health rose 1.13%. What’s getting cheaper Some categories saw prices fall in June compared with last year. Clothing and footwear fell 7.65%, information and communication fell 3.99%, and furnishing, decoration, household equipment and routine home maintenance fell 0.98%. What the Central Bank says In an economic bulletin issued two days ago, the Central Bank said inflation is expected to rise temporarily during 2026, due to the direct and indirect effects of international developments, before easing afterwards. On a harmonised basis, inflation in 2026 is forecast to rise significantly to 3.2%, up from 0.8% in 2025, mainly due to the economic impact of the war in the Middle East. The Central Bank identified the main risks as uncertainty in the international environment, fluctuations in energy prices, and the possibility of disruption to tourism and other exportable services that is more severe than currently expected. The Central Bank also said the announcement of a preliminary agreement between the United States and Iran was a positive development, but noted it has not yet been fully finalised or implemented, and that significant parts still require negotiation. Should the two sides fail to maintain their commitments and the agreement not be implemented, risks would remain around disruption to energy, commodity and raw material markets and related prices. 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