Inflation hits new high

While most of the continent's inflation is sliding, Malta's rate continued to climb hitting the five per cent mark in December - the highest it has been for several years.

New Eurostat figures published in Brussels yesterday show that last month the island registered the highest annual inflation rate among the 15-member euro area and along with Germany was the only member of the eurozone to register an increase from November.

The euro area inflation annual average last December stood at 1.6 per cent down from 2.1 in November, while the 12-month average stood at 3.3 per cent, 1.4 percentage points less than Malta's.

Eurostat sources attributed the recent rise in the cost of living to the new energy bills, introduced retroactively from October prior to the budget.

"The new water and electricity charges will definitely continue to put inflationary pressures on Malta's harmonised index of consumer prices," a Eurostat official told The Times.

"This sudden shock will however stabilise in the coming months," he said. Despite the surge in inflation, Malta is not the country with the highest inflation in the EU.

The Baltics, Latvia, Lithuania and Estonia, which have not yet adopted the euro, have all registered annual rates of over 7.5 per cent inflation.

Referring to the Euro area, Eurostat said that the main components with the highest annual rates in December were housing, alcohol and tobacco and hotels and restaurants while the downward impact was due to cheaper fuels for transport, heating oils and telecommunications.