Energy prices drive renewed acceleration in euro area inflation

Cyprus’ annual inflation rate accelerated to 5.2 per cent in August 2026, up sharply from 4.4 per cent in July, according to a flash estimate released by Eurostat on Tuesday.

The estimate, measured using the Harmonised Index of Consumer Prices (HICP), puts Cyprus among the euro area countries experiencing a significant acceleration in price growth.

Cyprus’ inflation rate has now risen for the fourth consecutive month, increasing from 3.5 per cent in May to 4.1 per cent in June, 4.4 per cent in July and an estimated 5.2 per cent in August.

The latest rate is also substantially higher than the 0.0 per cent recorded in August 2025, marking a 5.2 percentage point increase over the past year.

Prices in Cyprus are estimated to have risen by 1.5 per cent between July and August, according to Eurostat’s monthly HICP measure.

The August estimate represents a notable acceleration compared with the pace of annual inflation earlier in the year, when Cyprus recorded a rate of 1.5 per cent in March and 3.0 per cent in April.

The acceleration in Cyprus contrasts with the broader euro area picture, where annual inflation is estimated to have risen to 3.3 per cent in August, from 2.9 per cent in July.

The euro area rate is based on a flash estimate from Eurostat, the statistical office of the European Union.

The main driver of the euro area-wide increase was energy, which is estimated to have recorded an annual inflation rate of 14.3 per cent in August, up from 10.3 per cent in July.

Services remained the second-largest contributor, although their annual inflation rate eased to 3.0 per cent from 3.3 per cent in July.

Non-energy industrial goods recorded annual inflation of 1.2 per cent, up from 0.9 per cent in July.

Food, alcohol and tobacco recorded an annual rate of 1.2 per cent, unchanged from July.

The latest figures suggest that energy prices are playing an increasingly important role in the renewed acceleration in euro area inflation.

For Cyprus, however, the flash estimate does not provide a breakdown of the individual components behind the 5.2 per cent annual rate.

Cyprus’ inflation rate has therefore moved considerably further above the euro area average, with the August estimate standing 1.9 percentage points higher than the euro area figure.

The sharp rise also represents a marked change from the position a year earlier, when Cyprus recorded no annual inflation according to the HICP measure.

Eurostat’s August figures are flash estimates and will be followed by more detailed data as the final inflation figures are released.