Inflation in Cyprus accelerated to 3.7 per cent in September, according to the Cyprus Statistical Service (Cystat), as sharply higher fuel, electricity and housing costs continued to put pressure on household budgets.

The Consumer Price Index (CPI) rose by 0.74 per cent month-on-month to 104.01 units in September, from 103.25 in August, while prices were 3.7 per cent higher than a year earlier.

For the first nine months of 2026, the CPI increased by 2.3 per cent compared with the same period in 2025.

The September inflation rate was up from 3.5 per cent in August, when the main annual increases were also recorded in petroleum products and electricity and water.

The latest figures come as the government implements a new €70 million package of measures intended to ease the cost of living, taking the total value of new and existing support measures to about €160 million.

Among the strongest annual price increases in September were petroleum products, which rose by 25.8 per cent, while electricity and water increased by 11.2 per cent.

Industrial goods were the main category to record an annual decline, falling by 1.1 per cent.

Looking at individual groups of household spending, transport costs were up 11.9 per cent compared with September 2025, while housing, water, electricity, natural gas and other fuels increased by 9.6 per cent.

Clothing and footwear provided some relief, with prices falling by 10.8 per cent year-on-year.

Compared with August, the biggest monthly increase was recorded in housing, water, electricity, natural gas and other fuels, which rose by 3 per cent.

Educational services increased by 1.8 per cent, while food and non-alcoholic beverages rose by 1.3 per cent.

Transport costs, meanwhile, fell by 0.8 per cent compared with August.

Cystat’s analysis of the factors driving the annual change showed that restaurants and accommodation services made the largest positive contribution, at 3.23 units.

Recreation, sports and culture contributed a further 2.83 units, while alcoholic beverages and tobacco contributed 1.86 units.

The largest negative contributions came from health, at -2.62 units, information and communication, at -1.58 units, and clothing and footwear, at -1.41 units.

Within the broader categories, recreation services made the largest positive contribution to the annual change, at 2.97 units.

Mobile communication services had the largest negative contribution, at -1.53 units.

On a monthly basis, housing, water, electricity, natural gas and other fuels made the largest positive contribution to the change in the CPI, at 0.38 units.

Food and non-alcoholic beverages contributed another 0.23 units, while transport made a negative contribution of 0.14 units.

Looking at specific products and services, fuels and lubricants had the largest positive contribution to the monthly movement, at 0.34 units.

Passenger air transport had the largest negative contribution, at -0.48 units.

The figures underline the continued importance of energy and transport costs in the household cost-of-living debate, with the government having already introduced measures aimed at limiting the impact of higher prices.

The latest package approved by the cabinet includes a cut in the excise duty on heating oil from 7.4 cents to 2.1 cents per litre, reducing the tax by 5.3 cents per litre from November 1 until April 30, 2027.

The government has also extended electricity subsidies through 2027, with about 23,300 vulnerable households set to have the full increase in their electricity costs covered, while around 82,500 commercial consumers will receive support of up to 85 per cent depending on consumption.

The government is also extending VAT relief on a range of essential goods throughout 2027, including fresh fruit and vegetables, milk, baby nappies, adult incontinence products and feminine hygiene products.

The existing nil-VAT measure covering meat, fish and poultry is also being renewed and expanded to include bread, dairy products, coffee, sugar and baby food from October 12 until May 31, 2027.

VAT on the purchase and installation of residential photovoltaic systems is being cut from 19 per cent to 9 per cent.

A one-off payment of €200 is also being provided to 53,511 vulnerable beneficiaries, while financial support for people living in mountainous areas is being increased.

The revised mountain allowance will range from €175 for residents living between 600 and 800 metres, to €225 for those between 801 and 1,000 metres and €260 for those living above 1,000 metres. The changes are expected to benefit about 10,500 households and 24,000 eligible people.

Finance Minister Makis Keravnos has said the latest measures, together with support already in place, bring the government’s total cost-of-living assistance to approximately €160 million.

The government has also been seeking further flexibility from the European Commission for additional measures, according to Keravnos, while maintaining that Cyprus’ fiscal position gives it room to support households.

The latest inflation figures also come amid renewed concern over fuel prices.

The average price of diesel had risen to about €2.03 per litre at the start of October, according to figures cited by the Cyprus Mail, with prices ranging from €1.94 to €2.12 per litre.

The average price of 95-octane petrol was around €1.74 per litre, with prices ranging from €1.66 to €1.82, although further increases were expected because of high global oil prices.

President Nikos Christodoulides has defended the government’s response to the cost-of-living pressures, saying more than €1 billion had been spent on measures to ease the impact of rising prices.

“The government has invested more than one billion euros to address the impact of rising prices, particularly regarding fuel, which are driven by external rather than internal factors,” Christodoulides said.

“It is a very fortunate circumstance that the government has the financial capacity, precisely because of our responsible fiscal policy, to support our fellow people,” he added.

“We are here, evaluating measures, data and prices on a daily basis and intervening, and I am pleased, I repeat, that we have the ability to intervene, whenever and wherever necessary,” the president said.

The latest Cystat data suggest that while the government’s support measures are targeting some of the areas where household costs have risen most sharply, energy, fuel, housing and transport remain major sources of inflationary pressure.

The September increase also comes against a wider European backdrop of renewed inflationary pressure, with euro area inflation reaching 3.8 per cent in September, driven largely by a sharp rise in oil and gas prices amid escalating conflict in the Middle East.