Inflation on utilities way above euro area average

Malta's annual rates of inflation in a number of sectors are way above the euro area average, with the new water and electricity tariffs leading the way, figures provided by the National Statistics Office reveal.

In fact, the new utility bills appear to be one of the major reasons for the exceptionally high inflation rate recorded in December, which continued to buck the downward trend in the eurozone.

At five per cent, Malta registered the highest annual inflation rate among euro area countries, with the next highest, at 3.5 per cent, registered by the newest eurozone member Slovakia.

The biggest difference among sectors between Malta and the euro area is in the housing, water and electricity index, which indicates an increase of 16.1 per cent here as against an average of 3.6 per cent for the eurozone.

When the euro area inflation figures were published on Thursday, Eurostat sources said utility charges are putting inflationary pressures on consumer prices, adding, however, that the sudden shock should stabilise in the coming months.

The annual inflation rate does not record actual prices but the change in prices between the month under review and the same month a year before.

"While the price of utilities in Malta was still going up despite falling oil prices, other countries saw utility prices drop," a leading economist said yesterday. "This may be one reason why Malta seems to be going against the grain. It does not necessarily mean the price of utilities in Malta is higher than abroad. It means the change in price has been more drastic, contrary to what seems to be the case overseas."

But it was not only the household and utility sector that experienced an exceptionally higher than average increase.

In December, the annual inflation rate for the education sector rose by 9.3 per cent, in complete contrast to the euro area average of 1.4 per cent.

Similar differences were noticed in the food and beverage sector where inflation stood at 8.9 per cent contrary to the euro area average of 3.2 per cent and the hotels and restaurants sector where Malta registered an annual inflation of 6.6 per cent against the euro area average of 3.3 per cent.

ksansone@timesofmalta.com