Cyprus is expected to be among the few Eurozone countries to reach the European Central Bank’s 2 per cent inflation target by 2025–2026, as inflation across the bloc continues to ease gradually, according to the European Commission’s latest projections.

Although early 2025 saw food and tourism prices surge in Cyprus, driven by strong demand and the delayed impact of wage increases, these temporary pressures are expected to subside.

Wage growth is forecast to normalise, while energy and other commodity prices continue to moderate, allowing inflation to align with the ECB’s benchmark over the coming years.

Across the Eurozone, headline inflation is projected to fall from 2.4 per cent in 2024 to 2.1 per cent in 2025 and further to 1.7 per cent in 2026.

The broader EU figure is also expected to decline, with inflation forecast to reach 1.9 per cent by 2026.

The Commission’s outlook therefore points to a cautiously optimistic trajectory, although the pace of disinflation continues to vary significantly from one member state to another.

In this context, Cyprus joins a select group of countries projected to meet or fall below the 2 per cent threshold next year.

France is expected to lead with the lowest rate at just 0.9 per cent, followed by Ireland at 1.6 per cent, Finland at 1.7 per cent, and Italy at 1.8 per cent.

Inflation in Cyprus is forecast to hover around the 2 per cent mark throughout 2025 and 2026, placing it among the top performers in the euro area.

According to the data analysed by Philenews, Belgium is expected to see inflation ease to 2.8 per cent in 2025, before falling further to 1.8 per cent in 2026, as pressures on industrial goods and energy continue to decline.

In Germany, following a drop to 2.5 per cent in 2024, inflation is projected to decrease to 2.4 per cent in 2025 and 1.9 per cent in 2026.

Notably, a sharp fall in wholesale energy prices in early 2025 is expected to have a deflationary impact on retail energy costs.

Elsewhere, Estonia is forecast to maintain higher inflation, reaching 3.8 per cent in 2025 and easing to 2.3 per cent in 2026, as the impact of domestic fiscal measures and global commodity pressures gradually fades.

Meanwhile, Ireland recorded relatively low inflation at the start of 2025, averaging 1.6 per cent in the first quarter.

Although food prices remain elevated and services inflation is still strong, lower prices in non-energy industrial goods and commodities are expected to support a further decline, bringing annual inflation down to 1.6 per cent in 2025 and 1.4 per cent in 2026.

Greece presents a more complex picture. Inflation stood at 3 per cent in 2024—0.6 percentage points above the euro area average, and is projected to decline to 2.8 per cent in 2025 and 2.3 per cent in 2026.

However, core inflation, which excludes energy and food, is forecast to remain high, at 3.5 and 2.6 per cent respectively, due to persistent wage pressures and rising electricity and services prices.

Similarly, Spain recorded an average inflation rate of 2.9 per cent in 2024. This is expected to fall to 2.3 per cent in 2025 and 1.9 per cent in 2026, mainly as a result of easing energy costs. Services-related price pressures are also expected to ease gradually.

France is expected to experience one of the sharpest drops in inflation, with consumer prices forecast to rise by just 0.9 per cent in 2025, down from 2.3 per cent in 2024, largely due to a 5 per cent fall in energy prices.

A slight increase to 1.2 per cent is anticipated in 2026. In Croatia, inflation is forecast to decline from 4 per cent in 2024 to 3.4 per cent in 2025, before falling further to 2.4 per cent in 2026, as food and services inflation slows and energy-related inflation levels off.

In a similar vein, Italy is expected to benefit from sustained declines in energy prices and moderate wage growth, keeping headline inflation below 2 per cent in 2025 and reducing it further to 1.5 per cent in 2026.

In Latvia, however, inflation is projected to remain high at 3 per cent in 2025, due to strong wage-driven services inflation, before falling to 1.7 per cent in 2026. Even so, core inflation is forecast to remain above the headline rate.

In contrast, Lithuania is expected to experience a temporary increase in inflation to 2.6 per cent in 2025, as food and energy prices rose in the early months of the year.

Nevertheless, inflation is set to fall back to 1.2 per cent by 2026. In Luxembourg, headline inflation is forecast to ease to 2.1 per cent in 2025 and decline further to 1.8 per cent in 2026, helped by a slowdown in both food and services prices.