Cyprus recorded the lowest inflation rate in the European Union in July 2025, with the Harmonised Index of Consumer Prices (HICP) rising by a mere 0.1 per cent compared to the same month in 2024, as reported by both Eurostat and the Cyprus Statistical Service (Cystat).
In addition to this annual figure, monthly prices saw an increase of 0.4 per cent from June to July this year. The inflation landscape was varied across different sectors, with notable increases in the categories of restaurants and hotels, which rose by 5.9 per cent, and recreation and culture, climbing by 4.2 per cent.
Conversely, the country experienced significant decreases in other areas. Clothing and footwear prices fell by 7.1 per cent, while housing, water, electricity, and gas dropped by 4.4 per cent. This divergence in price changes illustrates the complex nature of the current economic environment.
When examining the changes from June 2025, clothing and footwear saw the sharpest decline, plummeting by 13.4 per cent. In contrast, transport prices increased by 3.8 per cent, and recreation and culture rose by 3.4 per cent, reflecting a mixed economic outlook.
From January to July 2025, the year-on-year analysis shows trends where recreation and culture expenditures increased by 6.9 per cent, while restaurants and hotels saw a rise of 5.4 per cent. However, clothing and footwear experienced a decline of 5.6 per cent during the same period, highlighting the varying consumer behaviours.
Energy prices also played a significant role in the inflation narrative, with the largest change by economic category being a 9.7 per cent decline compared to July 2024. This downturn contrasts sharply with the trends in other sectors.
At the European level, the inflation picture was less uniform. The euro area annual inflation rate stood at 2.0 per cent in July 2025, unchanged from June but down from 2.6 per cent a year earlier. In the broader European Union, the annual inflation reached 2.4 per cent, slightly up from 2.3 per cent in June but lower than the 2.8 per cent recorded in July 2024.
In this context, Cyprus, with its 0.1 per cent inflation rate, stands out in the bloc, followed by France at 0.9 per cent and Ireland at 1.6 per cent. Meanwhile, countries like Romania reported the highest annual inflation rates at 6.6 per cent, followed by Estonia at 5.6 per cent and Slovakia at 4.6 per cent.
The variances in inflation rates across member states illustrate the differing economic pressures they face. In July 2025, Eurostat noted that annual inflation declined in eight member states, remained stable in six, and increased in thirteen.
Contributing factors to inflation in the euro area included services, which added 1.46 percentage points to the annual rate, while food, alcohol, and tobacco contributed 0.63 percentage points. Interestingly, energy had a negative impact, contributing -0.23 percentage points to the inflation rate.
Cyprus’ inflation trajectory over the last year has shown a remarkable slowdown. The rate was at 2.4 per cent in July 2024, dropping to 0.4 per cent in May 2025, and then to 0.5 per cent in June 2025 before reaching the current 0.1 per cent in July 2025. This pattern starkly contrasts with Greece, which has seen a steady increase in prices, with inflation rising from 3.0 per cent in July 2024 to 3.7 per cent in July 2025.
