Cyprus HICP inflation ticks up in March

But still within euro target

 

Inflation in Cyprus according to the EU-harmonised consumer price index (HICP) increased slightly in March, rising by 1.4% compared with the same month of 2006, after recording 1.2% in February.

The main increases were recorded in the categories of food and non-alcoholic beverages, up 5.6% compared with March 2006, mainly owing to large increases in the autumn of last year, and education, which rose by 5.7% compared with a year ago. Presumably strong demand from foreign students is allowing institutions to raise prices above average inflation.

On a monthly basis there was a 9.6% rise in the prices of clothes owing to the end of the winter sales, and a 1.8% rise in the cost of transport.

Cyprus has only one or two months of inflation rate reporting to go before the European Commission, European Central Bank and other responsible bodies decide whether it has met the inflation criterion for adopting the euro.

Results for March suggest that Cyprus will be on track. We calculate that the 12-month inflation rate in March was 2.0% and that Cyprus‘s indicative 12-month inflation rate target that month would have been 2.9%. The comfort gap has therefore widened to 0.9% since its low of 0.5% in August.

So having virtually convinced the Europeans, the government now has to turn its attention to convincing Cypriots that the euro is a good idea for Cyprus.

CPI up 1.5% in March

 

Meanwhile, the national consumer price index, which is calculated in a slightly different basis, showed prices up by 1.5% in March compared with the same month of 2006.

Prices rose by 1.2% over the previous month. The Statistical Service said that this was mainly owing to increases in the prices of clothing and footwear following the end of the winter sales as well as to increases in the prices of petroleum products, certain fresh fruit and poultry. Decreases were recorded in the prices of certain fresh vegetables and electricity.

Fiona Mullen