Cyprus inflation drops to 1.6 per cent in March, according to Eurostat

The Consumer Price Index (CPI) in Cyprus exhibited a yearly growth rate of 1.6 per cent in March, a decline from the 2.1 per cent recorded a month earlier, according to Eurostat’s preliminary estimate, which was published on Wednesday.

On a monthly basis, comparing March to February, there was an increase of 0.7 per cent. In March 2023, the inflation rate stood at 6.1 per cent.

Notably, the March figures include the impact of the reduction in fuel consumption tax, which came to an end on April 1, 2024.

Meanwhile, consumer price growth in the eurozone decelerated to 2.4 per cent in March, down from the previous month’s 2.6 per cent, contrary to expectations for stability, driven by decreases in food, energy, and industrial goods prices.

Underlying inflation, closely monitored by the ECB, fell to 2.9 per cent from 3.1 per cent, below the anticipated 3.0 per cent. Services inflation remained stable at 4.0 per cent, possibly due to persistent wage growth.

The ECB is expected to acknowledge an improved economic outlook at its upcoming meeting but is unlikely to cut rates immediately, with June being a crucial point for policy changes. Investors anticipate rate cuts in June, followed by two or three more later in the year.

The ECB’s cautious approach is influenced by factors including expectations of inflation reaching its 2 per cent target next year, concerns about global economic conditions, and the need for essential wage data.

Despite economic challenges, unemployment remains low. The ECB’s potential rate cuts are seen as measures to ease restrictions rather than stimulate growth.