Inflation Moderates in Cyprus Amid Sectoral Price Shifts

In May 2025, Cyprus experienced a moderated inflationary trend with a notable decrease of 0.2 percent, despite a modest rise in the Consumer Price Index (CPI). The CPI advanced slightly by 0.26 points to 117.57 units from 117.31 in April 2025, demonstrating that while prices continue to rise, the pace has eased relative to previous periods.

Sectoral Highlights And Annual Comparisons

Analyzing annual performance, the agricultural sector led with a 4.7 percent increase, closely followed by a 3.5 percent rise in services. However, significant declines were recorded in petroleum products and electricity, dropping by 12.8 percent and 8.6 percent, respectively, over the year. Monthly, petroleum products decreased by 3.3 percent, marking the most substantial shift from April 2025.

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Consumer Categories: Winners And Losers

A closer look at specific categories reveals that, compared to May 2024, restaurants and hotels experienced the steepest price ascent at 4.9 percent, with recreation and culture and education also showing upward trends at 4.0 percent and 3.7 percent, respectively. In sharp contrast, transport and clothing, and footwear witnessed declines of 6.6 percent and 5.3 percent, respectively. Furthermore, between April and May 2025, clothing and footwear prices increased by 2.4 percent, while transport prices fell by an equal margin.

Impact Analysis Over The First Five Months

From January to May 2025, year-on-year fluctuations highlighted a 5.6 percent drop in clothing and footwear and a 4.6 percent rise in restaurants and hotels. Education also saw a 3.7 percent increase, reinforcing the mixed effects across consumer sectors.

Index Point Contributions

Examining the contributions toward the annual CPI change, restaurants and hotels added 0.52 points, while food and non-alcoholic beverages contributed 0.46 points. In a counterbalancing trend, the transport sector exerted a significant negative pressure, subtracting 1.21 points from the index. Fresh fruit and catering services provided positive impulses, adding 0.25 and 0.53 points respectively, whereas petroleum products had the most pronounced adverse impact, decreasing the index by 1.47 points.

Monthly Adjustments And Final Observations

When comparing May 2025 to April 2025, transport again emerged as a critical factor, reducing the index by 0.41 points. Conversely, fresh fruit and clothing items added 0.22 points and 0.14 points, respectively. The monthly trend was further influenced by a 0.30 point reduction from petroleum products, underscoring the role of energy prices in the broader inflation landscape.

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Cyprus Rents Rise 30–40% As Housing Demand Outpaces Supply

by THEFUTURE.TEAM

April 1, 2026

Escalating Rent Increases And Market Pressures

Cyprus now faces one of the EU’s most severe housing pressures, with recent reports indicating rent hikes of 30-40% over the past five years. According to Stefanos Stefanou, General Secretary of AKEL, these unprecedented increases have left many Cypriots grappling with soaring living costs. At a recent event at the European Union House in Nicosia, organised in collaboration with the European Parliament Office in Cyprus, MEP Giorgos Georgiou emphasised the urgent need for a comprehensive housing strategy.

Housing Demand Outstripping Supply

Data from the European Commission indicate that Cyprus will require approximately 43,000 new housing units over the next decade to meet demand. At the same time, nearly 270,000 residents are classified in the lowest income bracket. According to the national statistical service, more than 140,000 people live at or below the poverty threshold with annual income under €15,500, while an additional 213,000 in the lower middle-income group face similar financial pressure.

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Policy Gaps And Market-Driven Vulnerabilities

Lack of a coordinated state housing policy continues to affect market conditions. Stefanou said existing measures remain fragmented and do not address structural issues in housing access. He also warned that without targeted support programmes, risks linked to rising housing costs could increase. The financial ombudsman has indicated that, if current trends persist, foreclosures on primary residences could rise from 2026.

Government Initiatives And Strategic Proposals

The Ministry of Interior has introduced a housing strategy aimed at increasing residential supply, with a focus on affordable housing. Measures include urban planning incentives and the “Build to Rent” scheme, implemented in cooperation with the private sector. Plans target the construction of more than 2,500 housing units over the next two years, including around 400 designated as affordable homes.

Addressing The Role Of Foreign Investment

Local officials, including Andreas Vyras, pointed to the impact of foreign investment on the property market. In Limassol, rental prices have increased significantly in recent years, while a large share of city-centre properties has shifted toward short-term rental use. Reports indicate that a substantial portion of housing supply is now oriented toward foreign buyers and investors.

Toward A Comprehensive Housing Policy

Policy proposals discussed include the creation of a central housing authority and the development of state-backed financing mechanisms for housing programmes. Additional measures focus on regulatory frameworks aimed at protecting primary residences and improving access to housing for lower-income households.

Future Outlook And Critical Interventions

Georgiou said current approaches, which focus on market incentives and construction activity, may not be sufficient to address affordability challenges. Discussions include potential regulation of short-term rentals and targeted legislative measures to stabilize housing conditions across cities, including Nicosia and Limassol.

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