The spike in prices this year is the highest seen in a decade, a Central Bank report shows.
In its latest quarterly review, the Central Bank said inflation hit 4.5% during the first quarter of the year, up from 2.6% in December.
The Central Bank noted that this marks the highest inflation rate seen since 2012, however, price increases in Malta are still below euro area levels.
The main drivers of inflation in Malta, as measured by the basket of goods and services called the harmonised index of consumer prices, were increases in prices for services related to recreation and personal care.
Restaurants and cafes increased prices by 6.7% during the period under review
Housing services also contributed strongly to inflation in March, largely driven by fees for maintenance and repair of dwellings, the Central Bank said.
Food inflation also increased during the quarter under review, reaching 7.2% in March.
Bread and cereals as well as dairy were the main drivers behind the rise in food inflation, the Central Bank said, followed by meats.
In sharp contrast to the rest of Europe, energy inflation was unchanged in March, as electricity, gas and transport fuel prices remained stable through government support measures shielding the economy from rising international energy prices.
House prices still increasing
House prices have continued their seemingly relentless march upwards, with inflation increasing from 4.5% in December 2021 to 6.7% in the first quarter of this year.
Despite this increase, the Central Bank said house price inflation in Malta remained significantly below that in the euro area, where prices increased at an annual rate of 9.8%.
The Central Bank highlighted how residential property prices continue to be supported by numerous factors, including the low-interest rate environment and a number of government schemes.
It said property price growth has returned to a “dynamic path”, following the initial slowdown in growth during the initial stages of the COVID-19 pandemic.
Indeed, house price inflation exceeded levels recorded in the last five years and reached the highest level since the second quarter of 2016.