CYPRUS' EU harmonized inflation eased to 4.3 per cent year-on-year in April from 4.4 per cent in March, the statistics department said yesterday.

The April HICP reading was lower than the headline inflation of 4.6 per cent released on May 2.

Fuel-related utility bills were 12.4 per cent higher in April 2008 than a year ago, reflecting record highs in the price of crude on world markets. Transport costs were up 6.9 per cent and food inflation 4.3 per cent. Alcohol and cigarettes were unchanged on last year, while communications costs were barely higher. The cost of clothes and footwear was down 1.9 per cent.

For the January-April period, the index was 4.4 per cent higher than to a year ago, the statistics department said.

Projected at double that of euro area, The European Commission expects the Cyprus economy to continue to grow solidly by 3.7% in 2008 and 2009, despite an adverse external environment.
This is below the 4% initially forecast by the government but twice that of the rest of the euro area where growth forecasts are put at 1.7%.

In its spring economic forecasts, the European Commission is generally upbeat about Cyprus’s prospects.

Finance Minister Charilaos Stavrakis welcomed the report, saying Nicosia would manage to retain a growth rate more than double that of the Euro zone.

"The Cyprus economy has received praise because it is continuing to grow at a rate more than double that of the rest of the euro area.

"This is a significant achievement for which we must all be proud," he said.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia had projected a euro zone growth rate of 1.7% – down from an earlier forecast of 2.2%.

Almunia sees inflation rising by 3.6% – up from the initial forecast of 2.3% because of costlier fuel and grain. For Cyprus, inflation is seen at 3.75% – compared to the initial 2.5%.

"Cyprus is nevertheless one of the few European economies with conditions of full employment. At a time when large countries have significant unemployment rates, we import manpower," Stavrakis said.

Cyprus is the third largest island in the Mediterranean Sea. It has an area of 3,572 square miles and is about 120 miles to the west of Syria and 500 miles to the east of Greece. Nicosia is the capital and the island's largest city with a population of some 190,000.

Since 1974, the northern third of the island has been occupied by Turkish forces and has formed a separate (though internationally unrecognized) state. Although talks to resolve the situation have been held from time to time, Cyprus remains a divided island.

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