Cyprus is experiencing a renewed surge in inflation, with Eurostat's preliminary estimate placing harmonised inflation at 5.2% in August, up from 4.4% in July.
The figure places Cyprus in second place in the eurozone, behind only Lithuania, where inflation reached 5.8%.
The picture is even more concerning when compared with the European average. Across the eurozone, annual inflation rose to 3.3% in August from 2.9% in July, leaving Cyprus almost two percentage points above the average.
On a monthly basis, prices in Cyprus are estimated to have increased by 1.5% between July and August.
One explanation for this gap is the Cypriot economy's heavy dependence on expensive fossil fuels, both for transport and electricity generation.
This marks the fourth consecutive month of rising inflation. The rate increased from 3.5% in May to 4.1% in June, 4.4% in July, and now 5.2% in August.
Just a year earlier, in August 2025, inflation in Cyprus stood at zero.
The increase follows rising international oil prices after the outbreak of Israeli-US military operations against Iran.
Energy remains the main driver
Eurostat's data confirm that energy remains the principal factor behind the latest inflation spike.
Across the eurozone, energy prices increased by 14.3% year-on-year in August, compared with 10.3% in July.
This was by far the largest increase among the main categories:
- Services: 3.0%
- Non-energy industrial goods: 1.2%
- Food, alcohol and tobacco: 1.2%
Final figures released by the Statistical Service of Cyprus for July show how those energy pressures are feeding through into the broader economy.
Energy recorded the largest annual increase among economic categories, rising by 10.2%, while:
- Services increased by 6.6%
- Food, alcoholic beverages and tobacco increased by 3.8%
Sharp increases across sectors
Price increases were even more pronounced in individual categories.
Annual increases included:
- Restaurants and accommodation services: 12%
- Housing, water, electricity, gas and other fuels: 7%
- Transport: 5.7%
- Food and non-alcoholic beverages: 4.5%
The data indicate that elevated energy costs are being passed on to businesses and service providers, affecting restaurants, tourism, transport and ultimately the overall price level.
Fuel tax relief to continue
Against this backdrop, the Finance Ministry is preparing legislation to extend the 8.33 cent per litre reduction in fuel excise duty until the end of November.
The current measure expires on 17 September, and the aim is for the extension to be approved in time to take effect on 18 September.
Speaking to Politis Radio, Christodoulos Christodoulou, vice-president of the Petrol Retailers Association, welcomed the extension but warned that fuel prices remain exceptionally high.
According to Christodoulou:
- 95-octane unleaded petrol is currently around €1.60 per litre
- Diesel is approximately €1.86 per litre
- Without the tax reduction, diesel would be close to €1.95 per litre
Concern over heating oil
Particular concern is being expressed over the price of heating oil, which is approaching €1.48 per litre.
Christodoulou warned that at such price levels many households may struggle to purchase sufficient quantities ahead of the winter season.
Cyprus exposed to international developments
According to the Petrol Retailers Association, Cyprus remains highly vulnerable to international developments in energy markets.
"Every geopolitical tension directly affects the price of oil," Christodoulou said.
He added that international oil prices are already showing renewed upward momentum, creating additional pressure on consumers and businesses alike.
