Annual inflation rate dropped to 2.1% in May

Malta’s annual inflation rate fell to 2.1 per cent in May, down from 2.5 per cent in April, according to figures published by the National Statistics Office on Wednesday.

The drop means Malta’s harmonised inflation rate is now well below the eurozone average, which rose to 3.2 per cent in May from 3 per cent a month earlier.

The HICP, an EU-wide measure used to compare inflation across member states, showed Malta’s 12-month moving average inflation rate standing at 2.4 per cent in May.

While the annual inflation rate compares inflation in any given month to the same month the previous year, the 12-month moving average rate compares the average index for the latest 12 months with the average index for the previous 12 months.

The latest HICP figures suggest that while headline inflation has cooled, some everyday costs are still rising.

The largest upward pressure came from restaurants and accommodation services, which added 0.55 percentage points to overall inflation. The NSO said this was mainly driven by higher prices for restaurant services.

Transport was the second-largest contributor, adding 0.35 percentage points, largely because of higher air transport prices. Food and non-alcoholic beverages added a further 0.34 percentage points, mainly due to higher meat prices.

Malta is fully insulated from one of Europe's highest inflation drivers, energy, due to state-subsidised fuel and energy tariffs. 

The highest annual inflation rates were recorded in recreation, sport and culture, at 3.9 per cent, followed by restaurants and accommodation services, at 3.6 per cent.

Clothing and footwear continued to pull inflation down, with prices in that category falling by 4.3 per cent compared to a year earlier. Information and communication prices were also down, falling by 2.5 per cent.

According to the NSO, cheaper garments and mobile phone services were the main reasons for those downward contributions.

The local picture contrasts with the wider euro area, where inflation accelerated in May. Eurostat said services were the biggest contributor to euro-area inflation, followed by energy, food, alcohol and tobacco, and non-energy industrial goods.

Across the EU, annual inflation stood at 3.3 per cent in May, up from 3.2 per cent in April. The lowest rates were recorded in Sweden, at 1.1 per cent, and in Denmark and Czechia, both at 1.8 per cent.

The highest rates were in Romania (9.7 per cent), Bulgaria (6.3 per cent) and Lithuania (5.1 per cent).

Malta’s rate was 1.1 percentage points lower than the euro-area rate.

Eurostat’s figures also show that Malta registered a 1.4 per cent monthly increase in prices between April and May. Monthly inflation can be affected by seasonal changes, particularly in areas such as travel and accommodation.

The HICP differs from Malta’s Retail Price Index because it is designed for EU-wide comparison and covers spending by private households, institutional households and foreign visitors to Malta.