Eurostat inflation forecast points to sharp drop

The fall in the rate of inflation in Malta in February was the largest observed among European countries.

Provisional estimates issued by the European Union’s statistical agency, Eurostat, indicate that there was a substantial fall in the inflation rate in Malta in February. The Harmonised Index of Consumer Prices (HICP) inflation rate (the change over time in the prices of consumer goods and services purchased by euro area households) is anticipated to have decreased from 3.7% in January to 3.1% last month.

The fall in the rate of inflation in Malta was the largest observed among European countries. With a decrease of 0.6 percentage points, Malta’s decline was three times the average fall observed across the euro area. It is worth noting that, between August and January, the inflation rate across the euro area fell by 2.6%, while that in Malta fell by 1.3%, or by half the drop seen elsewhere. This mainly reflected the fact that in Malta the rate of food price inflation continued to rise while it was falling across Europe.

In its provisional estimates Eurostat does not indicate the causes behind the sharp fall in Malta’s inflation in February. It is therefore not yet possible to explain the change in inflation in that month. However, it is worth recalling that the Stabilità scheme started in February, with significant discounts on more than 400 essential food products. It is likely that this scheme has led to this sharp fall in inflation, which is the second largest fall observed in the last six months.

Eurostat’s finalised HICP statistics for February are expected to be published this Monday, 18th March, while the National Statistics Office (NSO) is expected to publish the retail price index for the same month next Thursday, 21st March. In about two weeks, therefore, we may be able  to analyse the root causes of the fall in inflation last month.

Month-on-month drop in inflation in Malta and the euro area

 Euro areaMalta
February 2024-0.2%-0.6%
January2024-0.1%0.0%
December 2023+0.5%-0.2%
November 2023-0.5%-0.3%
October 2023-1.4%-0.7%
September 2023-0.9%-0.1%
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