Lowest inflation rate in 32 months

The impact of food prices on inflation has halved in just two months.

Data issued by the National Statistics Office (NSO) show that, in March, Malta had the lowest inflation rate in 32 months, i.e. since July 2021. The observed rate, 1.9%, is equal to the average inflation rate that the country has had since March 2013. Previously, the average inflation rate was 2.6%, or a third more than the current rate.

This development was mainly due to the fact that the price of food decreased for the second month in a row. While before the Stabbiltà scheme the price of food was accelerating, since this scheme started, prices started to decrease.

The impact of food prices on inflation has halved in just two months. Besides the fact that there were discounts on more than 400 products under the scheme, other products also decreased in price so that they could remain competitive. Thus, the scheme ended up having a much wider impact than originally foreseen and this impact continues to spread as time goes by.

It should be noted that earlier this year – when the magnitude of the scheme was still unclear – the Central Bank predicted that inflation would be 2.9%. Now NSO data indicate that the inflation rate has already decreased to 1.9%, or one percentage point less than predicted.

The reduction in the price of food is also having impacts on other prices. In fact, inflation in services is also decreasing, while other items such as clothes and home furnishings are also starting to moderate in price.

Compared to a year ago, the inflation rate is about four times lower, and the indications are that these trends will continue in the coming months.

Photo: Gustavo Fring

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