Malta is forecast to have the lowest rate of inflation in Europe this year but prices will continue to climb throughout 2023.  

In its latest economic forecast published on Thursday, the European Commission said that in Malta inflation is set to rise to 5.6% in 2022. 

While this is a notable increase over the 0.7% recorded last year, it is still the lowest forecast across the EU.  

Consumers have been complaining of spiralling prices, with inflation climbing up in the list of people’s main concerns. 

Complaints about higher prices being charged than originally agreed for ordered goods and services, as well reports of discrepancies in prices from shelf to cashpoint, are being filed much more frequently with the market regulator and consumer groups have been warning of predatory price hikes.  

Energy spikes indirectly impacting Malta

Meanwhile, Brussels said that although Maltese authorities have committed to continue limiting energy price jumps in 2022, the substantial increase in inflation in the first two quarters of 2022 indicated that rising international energy and commodity prices were affecting Malta’s prices indirectly. 

The increase in prices for food, transport and imported goods is set to drive up price pressures in 2023, with inflation remaining elevated at 3.3%, the report says.  

Reacting to the news, Prime Minister Robert Abela tweeted that Brussels had revised its growth projections for Malta upwards.  

“Our policies are making a real difference where it matters,” he said.  

The economic forecast predicts that real GDP growth will reach 4.9%, which is higher than projected in spring. 

That is thanks mostly to stronger growth in the services sector, although it is also weighed down by the negative impacts of Russia’s invasion of Ukraine.

Overall, growth in 2022 is expected to be driven by domestic consumption and net exports. 

Air passenger data projections from the European Organisation for air navigation known as Eurocontrol, show that the export of tourism services is on course for a very rapid rebound in 2022. 

The sector is set to make a full recovery by 2023, contributing to growth in both years. 

2023 will experience slower growth

In 2023, Malta’s real GDP is forecast to increase at a slower pace, but still by a robust 3.8%, affected by a general economic slowdown of the main trading partners. 

It will also be partially compensated by the continued growth of tourism and other services exports.

The latest European Commission economic forecast.

The forecast also points to the news that Malta was last month removed by the Financial Action Task Force from the list of jurisdictions under increased monitoring known as the grey list. 

This positive outcome removed the related limited downside risks flagged in previous forecast rounds, the forecast reads.