Inflation dips to near 2-year low in June — drop fueled by energy price reductions

The harmonised inflation rate in Cyprus experienced a significant decline in June 2023 compared to the same period last year, reaching its lowest level in nearly two years, according to a report from the state’s statistical service released on Wednesday.

This drop was primarily driven by a notable decrease in energy prices. The figures indicate a positive trend towards lower inflation, providing some relief for consumers.

According to the statistical service, the Harmonised Index of Consumer Prices (HICP) increased by 2.8 per cent in June 2023 compared to June 2022, marking the lowest inflation rate since August 2021.

In comparison to the previous month, May 2023, there was a modest increase of 0.3 per cent in the HICP.

Looking at the period from January to June 2023, the harmonised inflation rate rose by 4.9 per cent compared to the corresponding period last year.

Looking at specific categories, the report revealed that Food and Non-Alcoholic Beverages (10.6 per cent) and Transport (-7.2 per cent) demonstrated the most significant variations in June 2023 compared to June 2022.

Regarding changes from the previous month, the largest fluctuations were observed in the categories of Restaurants and Hotels (2.8 per cent) and Housing, Water, Electricity, and Gas Supply (-2.8 per cent).

For the period from January to June 2023, compared to the same period last year, the most significant shifts were seen in Housing, Water, Electricity, and Gas Supply (9.7 per cent), Food and Non-Alcoholic Beverages (8.9 per cent), and Restaurants and Hotels (7.1 per cent).

The most substantial variations in economic categories, in comparison to June 2022, were observed in Energy (-15.4 per cent) and Food-Alcoholic Beverages-Tobacco (8.9 per cent).

In terms of monthly changes, the Energy category (-3.4 per cent) experienced the most significant decrease.

In addition, excluding the increases in consumption taxes, the HICP and inflation in general increased by only 0.05 per cent during the first half of 2023 (January to June), compared to the corresponding period last year.

This represents the lowest annual inflation increase rate for a six-month period since the first half of 2021.

It should be noted that inflation had risen by 4.75 per cent in the second half of 2022 and by 4.36 per cent in the first half of the same year, compared to the corresponding period in 2021.

The recent decline suggests a moderation in inflationary pressures, providing some stability to the economy and consumer prices.