Annual growth in business activity decreased to just below its historical average in December, the Central Bank of Malta says in its January Economic Update issue.

The bank said the European Commission’s Economic Sentiment Indicator for Malta decreased and fell below its long-term average. The Employment Expectations Indicator also decreased in December but remained above its long-term average.

In November, both industrial production and retail trade rose at a faster rate compared to October. Meanwhile, in October, annual growth in services production moderated slightly compared to September. The unemployment rate remained low from a historical perspective. It was unchanged from the preceding month and below the rate from a year earlier.

In November residential permits were above their year-ago level. In December, the number of residential promise-of-sale agreements was below that of a year earlier, while the number of final deeds was higher.

During the 12 months to November, growth in Maltese residents’ deposits, forming part of the broad monetary aggregate M3, picked up compared with October. Credit to Maltese residents, also increased at a faster pace when compared to the preceding month, reflecting faster growth in both credit to general government and credit to other residents.

In December, the annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) fell to 1.8%, while HICP inflation excluding energy and food stood at 2.0%. Both measures stood firmly below the euro area average. According to the Retail Price Index (RPI), inflation in December declined to 1.2%, from 1.3% in November.

In November, the Consolidated Fund recorded a higher deficit compared with a year earlier, as a rise in government expenditure outweighed an increase in government revenue.

The full Economic Update is available here.