Falling fuel and energy prices keep Cyprus inflation in check

Inflation in Cyprus remained almost flat in February, reaching just 0.1 per cent, as a drop in energy costs offset rising prices in the services sector, according to the latest report from the Cyprus Statistical Service (Cystat).

According to Cystat, the consumer price index in February 2026 decreased by 0.12 points, reaching 99.86 units compared with 99.98 units in January 2026.

At the same time, inflation in February 2026 increased at a rate of 0.1 per cent on a year-on-year basis, reflecting modest price pressures across the economy.

Among the economic categories, the largest positive change compared with February 2025 was recorded in agricultural products, which increased by 4.2 per cent.

In contrast, the largest negative change compared with February 2025 was observed in electricity and water, which declined by 9.3 per cent.

Compared with January 2026, the biggest monthly change was also recorded in electricity and water, which fell by 2.5 per cent.

Further analysis showed that, compared with February 2025, the most notable changes among the CPI categories were recorded in clothing and footwear, which declined by 6.8 per cent, restaurants and accommodation services, which increased by 4.7 per cent, educational services, which rose by 3.7 per cent, and transport, which decreased by 3.7 per cent.

When comparing February 2026 with January 2026, the largest monthly movements were recorded in clothing and footwear, which rose by 0.8 per cent, recreation, sports and culture, which fell by 0.5 per cent, and food and non-alcoholic beverages, which declined by 0.4 per cent.

In terms of contributions to the annual change in the CPI, the largest positive impact compared with February 2025 came from restaurants and accommodation services, which contributed 3.21 units.

Other significant positive contributions were recorded in recreation, sports and culture, which added 2.70 units, and alcoholic beverages and tobacco, which contributed 1.86 units.

The largest negative contributions to the annual CPI change were recorded in health, which subtracted 2.64 units, information and communication, which reduced the index by 1.60 units, and clothing and footwear, which lowered it by 1.15 units.

Regarding month-on-month changes between February 2026 and January 2026, the largest impact on the CPI was recorded in food and non-alcoholic beverages, which reduced the index by 0.08 units.

Additional effects were recorded in clothing and footwear, which increased the index by 0.05 units, housing, water, electricity, gas and other fuels, which lowered it by 0.04 units, and recreation, sports and culture, which also reduced it by 0.04 units.

Cystat further reported that the largest positive contribution to the annual CPI change was attributed to catering services, which added 2.82 units to the index.

By contrast, the largest negative contribution to the annual change in the CPI was attributed to petrol.

In the month-on-month comparison, clothing recorded the largest positive impact, contributing 0.06 units to the CPI.

Meanwhile, vegetables recorded the largest negative impact, reducing the index by 0.19 units compared with January 2026.

However, economists warn that this period of low inflation is now under threat due to the escalating crisis in Iran.

A potential spike in global oil prices and disruptions to supply chains could quickly reverse the current downward trend in energy and transport costs.