The Cypriot economy is caught between inflation and EU recommendations.
Against the backdrop of economic developments, including the crisis in the Middle East, the Eurogroup and the EU Informal Council on Economic and Financial Affairs held their meetings.
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Cyprus recorded the highest inflation rate according to Eurostat, and despite the reassuring messages it had been sending until recently—and just a few hours after S&P’s historic upgrade— the Minister of Finance, addressing European officials, sent out an SOS regarding inflationary pressures, according to a statement from the Ministry.
“In his remarks, Mr. Keravnos highlighted the effects of rising inflation on citizens’ cost of living, noting the need for close monitoring of the situation at the collective level and readiness to take appropriate policy measures to support economies in the short term.”
READ ALSO: Keravnos’s SOS on inflation and the cost of living: the need for close monitoring and support measures
Cyprus, in contrast to last year when inflation was zero, is facing a massive wave of price increases, with inflation projected to close the year at 4.5%. At the same time, government tax revenues are steadily increasing.
“General government revenue has increased by nearly 3% since 2026. It has reached 17 billion, while spending has increased by only 1.4%.”
Makis Keravnos – Minister of Finance (September 16, 2026)
The “warning signs”
The Europeans’ recommendations for budgetary restraint remain in place.
“And if new measures are needed in response to higher energy prices, they must be targeted, temporary, and compatible with our fiscal rules.”
Kyriakos Pierrakakis – President of the Eurogroup and Minister of National Economy
“Energy is a key variable in our forecasts and clearly affects not only consumers and investors but also our commitment to bringing inflation back to the 2% target.”
Christine Lagarde – President of the European Central Bank
“Fiscal space is limited, and governments must be cautious.”
Rolf Strauch – Head of the European Stability Mechanism
The main cause of the surge in inflation in Cyprus is the energy sector, where prices have risen by 15% compared to last year. Compared to the previous month, prices rose by 4%.
Watch the report by Kleio Vourkou:
