Newsroom
Energy prices in Cyprus rose 21% in September compared with a year earlier, putting pressure on household budgets as inflation on the island outpaced the euro-area average.
The increase was a major driver of Cyprus’ annual inflation rate of 5.2%, according to Central Bank Governor Christodoulos Patsalides. For families trying to cover energy bills alongside groceries, housing, and other expenses, the figures point to a continuing squeeze despite the economy’s strong performance.
Services also became more expensive, with prices rising 7.1%. Across the euro area, overall inflation reached 3.8%, up from 3.2% in August.
Patsalides warned that inflation could rise further, highlighting the need to closely monitor developments amid geopolitical uncertainty and the energy shock.
There was, however, a cautiously encouraging sign. Inflation, excluding food and energy, eased to 3.9% in September from 4.5% in August. That means prices in those categories were rising more slowly—not that they had fallen.
For borrowers, the European Central Bank’s decision Thursday to leave its key interest rates unchanged brought no fresh rate cut. Patsalides said earlier increases and higher borrowing costs were helping to limit the spread of energy-related price pressures, although tighter financial conditions were also expected to weigh on European growth.
Room for targeted help
Despite the pressure on prices, Patsalides said Cyprus’ economy remained resilient, supported by domestic spending, high employment, and sound public finances.
That strength, he said, gives the government room to introduce targeted support for vulnerable groups without putting excessive strain on public finances. His statement did not announce any new measures.
A strong job market was helping to support household incomes and spending, while well-capitalized banks and growth in sectors such as information and communication technologies were helping the economy withstand outside shocks.
The challenge is to preserve that strength while containing inflation. For households, the immediate concern is more practical: how much of the next paycheck will be left once the bills are paid.
