March inflation rises in Cyprus and the Eurozone due to Middle East crisis

According to preliminary data from Eurostat, annual inflation in Cyprus accelerated to 1.5% in March 2026, up from 0.9% in February. Across the Eurozone, the annual inflation rate rose to an estimated 2.5%, compared to 1.9% in the previous month. The primary driver for this increase is the energy sector, with inflation for energy products jumping to 4.9% in March from -3.1% in February. Other components like services, food, alcohol, tobacco, and non-energy industrial goods also contributed to the figures. The current inflationary pressure is attributed to geopolitical instability in the Middle East affecting fuel prices. In Cyprus, the agricultural sector is further impacted by outbreaks of foot-and-mouth disease, compounding production costs. Estonian central banker Madis Muller, a member of the European Central Bank Governing Council, indicated that interest rate hikes could be considered in the next policy meeting if the conflict persists. The Cypriot government has announced measures to mitigate impacts on fuel, electricity, and food prices as the country enters the Easter period.