Annual inflation in Cyprus accelerated to 4% in June 2026, which is one of the highest rates in the eurozone, significantly higher than the average for the monetary union. Back in January and February, prices on the island rose by only 1.2% and 0.9%, and Cyprus was among the countries with the lowest inflation. Such data follows from the preliminary assessment of Eurostat, published on July 1.

Cyprus has gone from being an outsider to a leader in price growth

The reversal turned out to be sharp. At the end of 2025 and in the first months of 2026, Cyprus was at the tail end of the eurozone, with almost zero price increases in some months. Then the indicator went up: 1.5% in March, 3% in April, 3.5% in May and 4% in June. At the same time, in June, most of the eurozone countries, on the contrary, slowed down, while prices in Cyprus continued to accelerate. On a monthly basis, they added 0.8%, the second result in the block after Malta.

Who else is in the top five?

Lithuania (5.5%), Bulgaria (5.3%), Croatia (4.2%) and Cyprus (4%) were above the eurozone average in June, followed by Greece with 3.9%. Malta had the lowest price growth (1.9%); France and Estonia (2%), Germany (2.4%) and Finland (2.7%) were below average. In the eurozone as a whole, annual inflation fell to 2.8% from 3.2% in May, and prices fell by 0.1% for the first time this year.

Rising prices are fueling energy supplies and the Middle East conflict

The main driver is energy resources. Supply declined after disruptions to shipping in the Strait of Hormuz and a spike in Brent oil and gas prices amid conflict in the Middle East. In annual terms, energy prices rose by 8.7% in the eurozone in June, but this is already less than 10.8% in May. Services added 3.2% to inflation, while products added 1.6%. Energy pressure is easing in most EU countries, but Cyprus, despite the truce that has been in effect for several days, has not yet felt a detente.

What does this mean for ECB rates?

Core inflation, which does not take into account volatile energy and food prices, dropped to 2.4% in the eurozone. The European Central Bank is primarily looking at it. Analysts believe that with further restraint of price growth in most EU countries, the regulator will not continue to tighten policy and raise rates.

https://lenta.cy/infljacija-na-kipre-uskorilas-do-4-i-voshla-v-top-5-evrozony/