Cyprus harmonised inflation rises to 1.9% in May

The EU-harmonised inflation rate (HCIP) in Cyprus rose for the third consecutive month in May, as the index rose by 1.9% compared with May 2006, up from 1.6% in April.

Like the national consumer price index, HICP annual inflation appears to be being driven by food and non-alcoholic beverages. Prices of these rose by 6.5% year on year in May, up from 6.0% in April. However, compared with the previous month food prices fell, which means that inflation in this category might have reached its peak.

On a monthly basis the biggest rise compared with the previous month was recorded in transport, up 1.9%, and housing, water electricity and gas, up 1.3%.

These increases may be related to the upward trend since January of oil prices, which heavily influence electricity and transport costs.

According to our calculations, 12-month HICP in May—the measure used for euro adoption purposes—was 1.9% in May.

On May 16th the European Commission noted that Cyprus had met the inflation criterion and recommended that Cyprus should adopt the euro on January 1st 2008.