Inflation in Malta was 3.7 per cent in December, down from 3.9 per cent in November, but still above the EU and Eurozone average because of upward pressure from food prices, official statistics show.  

Euro area inflation was 2.9% in December, up from 2.4% in November. European Union annual inflation was 3.4% in December, up from 3.1% in November. A year earlier, the rate was 10.4%.

The National Statistics Office said the highest annual inflation rates in December 2023 were recorded in Food and non-alcoholic beverages (9.5 per cent).

Food prices are, by far, the biggest single source of inflation in Malta.

It explained that the the largest upward impact on annual inflation was registered in the Food and non-alcoholic beverages Index (+1.69 percentage points), largely due to higher prices of vegetables.

The second and third largest impacts were measured in the Restaurants and hotels Index (+0.64 percentage points) and the Housing, water, electricity, gas and other fuels Index (+0.53 percentage points), mainly on account of higher prices of restaurant services and rents, respectively.

Food price inflation came to the fore over the past few days after Times of Malta revealed that the government was pressing retailers and importers to cut the prices of selected food items by 15%. The Chamber of Commerce hit out at the government's efforts last Sunday, saying this was a return to price fixing that would not succeed in reducing inflation and would narrow consumer choice. 

In its statement on Wednesday the NSO said downward impact on annual inflation was registered in the Communication Index (-0.38 percentage points), mainly reflecting lower prices of mobile phone services.

Inflation in Malta remains higher than the EU average. NSO

In the EU, Eurostat said the lowest annual rates of inflation were registered in Denmark (0.4%), Italy and Belgium (both 0.5%). The highest annual rates were recorded in Czechia (7.6%), Romania (7.0%) and Slovakia (6.6%). Compared with November, annual inflation fell in fifteen Member States, remained stable in one and rose in eleven.

In December, the highest contribution to the annual euro area inflation rate came from services (+1.74 percentage points, pp), followed by food, alcohol & tobacco (+1.21 pp), non-energy industrial goods (+0.66 pp) and energy (-0.68 pp). 

Inflation rates in EU countries including Malta (Eurostat).

Meanwhile, the UK said on Wednesday that inflation unexpectedly rose in December, dashing expectations of a slowdown, dimming hopes of an early interest rate cut and prolonging a cost-of-living squeeze before an election.