Inflation in Cyprus fell to its lowest level since 2020 in 2025, according to data released on Thursday by the Statistical Service, offering limited but tangible relief to household budgets after years of sharp price increases.
Annual inflation stood at just 0.13% in 2025, down from 1.81% in 2024. By comparison, inflation reached 3.53% in 2023 and surged to 8.39% in 2022 in the aftermath of the energy crisis. In 2020, inflation was negative, at -0.64%.
Prices ease across key consumer categories
Detailed figures show that prices for many everyday goods and services either declined or stabilised over the course of 2025. The sharpest annual drop was recorded in clothing and footwear, where prices fell by 6.48%. Transport costs declined by 1.38%, while prices also fell in furnishings, household equipment and cleaning products (-0.7%), housing, water, electricity and gas (-0.66%), and food and non-alcoholic beverages (-0.41%).
By contrast, notable increases were recorded in restaurants and hotels, where prices rose by 4.72%, followed by education (3.65%) and recreation and culture (3.10%). Health-related costs rose more modestly, by 1.53%.
Monthly trends and sectoral shifts
Inflation continued to ease towards the end of the year, falling by 0.5% in December 2025, following an identical decline in November. In December 2024, inflation had been running at a significantly higher rate of 2.6%.
Compared with December 2024, the largest positive annual change was observed in services (3.1%), while the steepest declines were recorded in electricity prices (-9.4%) and agricultural products (-5.8%). On a month-on-month basis, compared with November 2025, the largest increase was seen in agricultural products (3.0%).
Looking at broader categories year on year, the most pronounced changes compared with December 2024 were in clothing and footwear (-7.9%), restaurants and hotels (4.9%), education (3.5%) and food and non-alcoholic beverages (-2.9%). Compared with November 2025, the largest monthly shifts were recorded in food and non-alcoholic beverages (0.8%) and transport (-0.4%).
Minimal cost-of-living allowance adjustments
The sharp slowdown in inflation has a direct impact on the cost-of-living allowance (COLA), which will be marginal from January. Despite intense public debate and political friction around wage indexation, salary increases linked to COLA in January 2026 will be minimal.
For a gross monthly salary of €1,000, the increase will be approximately €1, while a gross salary of €1,500 will rise by around €1.50.
According to a circular issued by the Ministry of Finance, from 1 January 2026 and for a six-month period, the COLA will be adjusted by 0.10%, increasing the index from 360.98% to 361.44% on basic salaries, with a minimum threshold of €13,803.
From 1 July 2026, the COLA for a 12-month period will be adjusted by 0.12%, reaching 361.53%, with a minimum threshold of €13,807.
Based on circulars issued by the Employers and Industrialists Federation (OEB) and the Cyprus Chamber of Commerce and Industry (KEBE), and following the permanent agreement reached by social partners on 13 November 2025, wages as of 1 January 2026 will be adjusted by 80% of the annual increase in the consumer price index, provided that the previous year records positive economic growth.
The agreement further provides that as of 1 July 2026, wages will be adjusted by an additional 10% of the annual increase in the index, bringing the total adjustment to 90%.
By way of example cited by OEB, for a total salary of €1,500 at the end of December 2025, the COLA increase will amount to €1.50 in January, rising to €1.80 in July.