Cyprus HICP inflation falls to 1.2% in Feb

The harmonised consumer price inflation rate (HICP) fell by 0.3% month on month in February, leading to a year-on-year rate of 1.2%, compared with 1.4% in January.

According to our calculations the 12-month HICP rate (Mar 06 to Feb 07) was 2.1% and therefore within the Maastricht target.

The 12-month HICP rate is the one that will be used in a few months’ time to assess whether Cyprus has met the Maastricht inflation criterion to adopt the euro in January 2008.

This rate must be no more than 1.5% above the three EU countries with the lowest 12-month inflation rates. In January these three were again Poland, Finland and Sweden, with an average inflation rate of 1.4%.

Cyprus’ implicit target was therefore 1.4% + 1.5% = 2.9%.