Inflation at two-year low 2.8%

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Harmonized inflation plunged in June to 2.8% compared to last year, falling to the lowest level in nearly two years due to a significant drop in energy prices.

A year earlier, the annual inflation rate in Cyprus was 9.0%, which stood at 8.6% in the eurozone and 9.6% in the EU.

In June, the annual inflation rate dropped in Cyprus (from 3.6% in May to 2.8%), in the eurozone (6.1% to 5.5%), and in the EU (7.1% to 6.4%), according to Eurostat.

The lowest annual rates were registered in Luxembourg (1.0%), Belgium and Spain (both 1.6%).

The highest annual rates were recorded in Hungary (19.9%), Slovakia (11.3%) and Czechia (11.2%).

Compared with May, annual inflation fell in 25 Member States, remained stable, and rose in one.

In June, the highest contribution to the annual euro area inflation rate came from food, alcohol & tobacco (+2.35 percentage points, pp), followed by services (+2.31 pp), non-energy industrial goods (+1.42 pp) and energy (-0.57 pp).

Cyprus’ Harmonized Index of Consumer Prices (HICP) rose by 2.8% between June 2022 and June 2023.

Compared to the previous month, the HICP went up by 0.3%, and for January – June, it rose by 4.9% compared to the previous year.

Compared to June 2022, the largest changes were noted in Food and Non-Alcoholic Beverages, which went up by 10.6%) and Transport dropped by 7.2%.

Compared to May 2023, the largest changes were recorded in Restaurants and Hotels, up by 2.8% and Housing, Water, Electricity, Gas and Other Fuels, down by 2.8%.

For January – June 2023, compared to the previous year, the largest changes were in Housing, Water, Electricity, Gas and Other Fuels, which rose 9.7%; Food and Non-Alcoholic Beverages went up 8.9%, and Restaurants and Hotels increased by 7.1%.

As regards the economic origin, the largest changes when compared to the index of June 2022 were in energy prices decreasing 15.4% and Food-Alcoholic Beverages-Tobacco, which went up 8.9%.

Excluding consumption tax increases, the HICP, and by extension, inflation, increased in the first half of 2023 (January – June) by only 0.05%.

This is the lowest six-month annual rate of increase in inflation since the first half of 2021.

In the second half of 2022, inflation increased by 4.75% and in the first half of the same year by 4.36%.