Inflation in Cyprus has decreased significantly to 1.5% during the first half of 2024, marking a notable reduction from previous years. This decline is largely attributed to stabilised energy prices and effective monetary policies. The Central Bank of Cyprus reported that the deceleration in inflation was driven by a combination of reduced global energy prices and a stronger euro, which helped mitigate import costs.

Energy Prices and Economic Stability

The stabilisation of energy prices played a crucial role in the overall reduction of inflation. In previous years, fluctuations in energy prices significantly impacted the cost of living and production expenses. The recent steadiness in global energy markets has provided a respite, allowing for more predictable economic planning and reduced pressure on household budgets.

Core Inflation and Food Prices

Despite the overall reduction, core inflation—excluding volatile items like food and energy—remains a concern. Persistent price increases in food and services continue to exert upward pressure. The Central Bank has noted that food prices have been particularly resistant to decline, influenced by factors such as supply chain disruptions and increased production costs.

Monetary Policies and Economic Measures

Effective monetary policies implemented by the Central Bank of Cyprus have also contributed to the reduction in inflation. Interest rate adjustments and other monetary tools have been employed to control inflationary pressures while supporting economic growth. These measures have helped maintain a balance between curbing inflation and fostering a conducive environment for investment and consumption.

Economic Outlook

The Central Bank remains vigilant in monitoring inflation trends, aiming to sustain economic stability and growth. While the decline in inflation is a positive development, the ongoing challenges in managing core inflation and food prices require continuous attention. The economic outlook for Cyprus remains cautiously optimistic, with the expectation that stabilised inflation will support broader economic recovery and growth.