Rising food prices make inflation bite

Inflation continues to work its way through the Maltese economy, with prices in May 2022 being on average 5.8 per cent higher than in May 2021, pushed in large part by the rising cost of food and a related increase in restaurant prices, according to a new release by the National Statistics Organisation (NSO) on the latest Harmonised Index of Consumer Prices (HICP).

The year-on-year rate is higher than it was in April (5.4 per cent), reflecting the continuing challenges caused in large part by Russia’s invasion of Ukraine, which between them account for over a quarter of the world’s wheat exports, a fifth of barley and corn exports, and two-thirds of sunflower oil exports.

The disruption the war has caused on international food markets so far, although significant, is unlikely to have reached its full extent.

Food prices have increased by 10.4 per cent since May of last year, driven in large part, the NSO says, by the price of meat. Restaurants and hotels have also become 4.8 per cent more expensive, mainly on account of higher prices of restaurant services.

The housing, water, electricity, gas and other fuels category is now 8.8 per more expensive, pushed almost entirely by the increasing price of house maintenance services, as energy and fuel is subsidised in Malta.

Taking their relative weighting into account, the 5.8 per cent total annual inflation is driven by food (+1.79 percentage points), restaurants and hotels (0.97 percentage points), housing (0.85 percentage points), transport (0.66 percentage points), recreation and culture (0.55 per centage points), and furnishing and household equipment (0.39 percentage points).

When comparing the Maltese HICP with the euro area counterpart for the latest available data, that is, April 2022, the annual rate of change registered by the Maltese HICP All-items Index was 5.4 per cent, two percentage points lower than the 7.4 per cent registered for the euro area.

However, the annual rate of change for the Maltese All-items HICP excluding energy and unprocessed food was 5.4 per cent, 1.5 percentage points higher than the 3.9 per cent registered for the euro area.

The HICP measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. The HICP is calculated according to rules specified in a series of European Union (EU) regulations that were developed by Eurostat in conjunction with the EU Member States. The HICP is used to compare inflation rates across the EU