Cyprus Inflation Remains High as Euro Area Expectations Ease

Cyprus' inflation rate remains significantly higher than the euro area average, despite European consumers becoming slightly more optimistic about future inflation. According to the latest survey from the European Central Bank (ECB), median consumer expectations for inflation over the next 12 months fell to 2.9% in July from 3% in June.

The ECB's figures show that expectations for inflation over the following three years also eased, to 2.7% from 2.8%, while expectations five years ahead remained unchanged at 2.4%. Consumers' perception of inflation over the previous 12 months edged down, from 3.6% to 3.5%.

Cyprus, however, continues to face stronger price pressures than the wider euro area. Annual inflation in Cyprus reached 4.4% in July, according to Eurostat and the Cyprus Statistical Service (Cystat), putting it jointly third among EU member states for annual inflation. Prices in Cyprus increased particularly sharply in restaurants and accommodation services, which were 12% higher than a year earlier.

The ECB's survey also found that consumers had become slightly less optimistic about their income prospects, with expected nominal income growth over the next 12 months falling to 1% from 1.1% in June. Meanwhile, the Economics Research Centre of the University of Cyprus has forecast real GDP growth of 2.7% in 2026, down from an estimated 3.8% in 2025.