Cyprus posts first deflation in 49 years

Decreases in the prices of electricity, air fares, and potatoes have helped Cyprus register its first negative annual inflation fsince 1964.

Cyprus has registered its first negative annual inflation in 49 years. (AAP)

Cyprus has registered its first negative annual inflation for 49 years, as demand nosedived on the recession-hit island.

The inflation rate for December 2013 decreased by 2.3 per cent compared with a 2.1 per cent fall in November and 1.1 per cent increase in December 2012, said the Cyprus Statistical Service said on Friday.

"It is worth noting that 2013 is the first year since 1964 that a negative annual rate of inflation is recorded," the service said in a statement.

"This is mainly due to decreases in the prices of electricity, air fares, potatoes and certain clothing items."

It said increases were recorded in the prices of certain fresh vegetables.

Cyprus is suffering an unprecedented recession and record unemployment after a signing in March a 10-billion-euro rescue deal with a "troika" of international lenders.

A delegation from the International Monetary Fund, the European Commission and the European Central Bank is expected to visit Cyprus in late January to conduct a third assessment of the Mediterranean island's economy and banking system.