Cyprus sees record low inflation in June

The inflation rate in Cyprus dropped to 1.9 percent in June, the lowest level in the last 25 months, the country's statistical service (Cystat) said Thursday.

The Consumer Price Index (CPI), which measures inflation, dropped by 0.34 units in June to 114.38 units, slightly lower than 114.72 points in May 2023.

In the January-June period, the CPI increased by 4.6 percent compared to the same period last year.

However, some economists expected the inflation to grow again in July as the government has re-established the earlier 19 percent Value Added Tax (VAT) on fuel products and electricity, which was halved in mid-2022 to reduce rampant energy prices.

According to Marios Drousiotis, head of the Cyprus Consumers Association, the higher VAT has immediately caused an increase of almost 9 cents (0.098 U.S. dollars) per liter (about 6 percent) in the price of petrol and diesel fuels, which is expected to be reflected in the inflation rate for the next few months, unless oil prices fall in international markets.

Mainly due to a spike in fuel and electricity prices, the inflation rate in Cyprus grew 9.1 percent in May 2022, reaching the highest level in 40 years.