Inflation eases but food remains on an upward trajectory, Central Bank of Malta report shows

Annual inflation may have slipped to its lowest level since 2021 last November but food inflation continued to rise, the Central Bank’s Economic Update shows.

Inflation as measured by the retail price index (RPI) stood at 3.6% in November, 0.1 percentage point lower than in October.

The decline was driven by lower inflation in several components with transport and communication going into negative territory and furnishings and household equipment slowing down to 3.2% from 4.5%. Inflation also slowed down in beverages and tobacco (down to 3.9% from 5%), while clothing and footwear fell by just under a percentage point.

However, food inflation rose to 7.5% in November from 6.8% a month earlier.

Energy prices remained unchanged, reflecting the government support to maintain electricity and fuel prices stable.

Similar patterns were witnessed in the Harmonised Index of Consumer Prices (HICP), which is the measurement used for comparison across the EU.

Annual HICP inflation eased to 3.9% in November, from 4.2% a month earlier. This was driven by slower growth in processed food inflation, services inflation and several other components.

Overall, food inflation remained unchanged at 7.2% in November, as a drop in processed food inflation was counteracted by a rise in unprocessed food inflation. While inflation in the former eased to 7.3% from 8.2% a month earlier, unprocessed food inflation rose to 6.7% from 4% in October.

The CBM Economic Update released on Wednesday shows that according to Jobsplus data the number of persons on the unemployment register stood at 959 in October, down from 1,004 in September, and from 984 recorded a year earlier.

The seasonally-adjusted unemployment rate remained unchanged at 2.5% over the last three consecutive months. It went down from 2.8% in October 2022.

The report states that the level of Maltese residents’ deposits decreased when compared to the same month last year.

The CBM said this decline reflects lower balances belonging to financial intermediaries and, to a lesser extent, those belonging to firms, while household deposits increased.

Meanwhile, annual growth in credit to Maltese residents increased at a faster pace compared with a month earlier. In October, the Consolidated Fund recorded a smaller deficit compared with a year earlier. This reflects a rise in government revenue and a decline in government expenditure.