Inflation down in February as food prices increased at slower pace

Inflation dropped to 3% in February with the decrease largely attributable to a slowdown in food inflation, data released on Monday by the National Statistics Office shows.

The annual rate of inflation as measured by the Harmonised Index of Consumer Prices (HICP) dropped by 0.7 points in February when compared with the previous month.

The HICP is the measurement used across the EU to be able to compare inflation across the 27 member states.

Malta’s annual inflation rate in February was 0.4 percentage points higher than the 2.61% registered for the euro area.

The NSO said that the largest upward impact on annual inflation was measured in the Food and non-alcoholic beverages Index (+1.22 percentage points), largely due to higher prices of milk.

However, when compared to January food prices increased at a slower pace thus contributing to the overall reduction in inflation.

The NSO statement does not attribute the slowdown in food prices to the government-sponsored food price stability scheme, Stabbiltà, that came into force on 1 February.

However, on X, Prime Minister Robert Abela said the Eurostat figures “have confirmed” that the Stabbiltà programme “has lowered inflation greatly”.

After the initial indications, Eurostat figures for February have confirmed that our Stabbiltà programme has lowered inflation greatly. Our economic policies continue making a real difference where it matters. - RA

— Robert Abela (@RobertAbela_MT) March 18, 2024

In February, Maltese consumers started benefitting from price reductions on several food products after the government reached an agreement with major importers and supermarket chains. The Stabbiltà scheme lowered the prices on 15 categories of basic foods and the arrangement, which started on 1 February, is set to remain in place until the budget in October.

The reduction had to be a minimum of 15% on the recommended retail price (RRP) set by importers and producers on 31 October last year. In many instances, the actual price reduction amounted to a few cents, especially on products bought at large supermarkets.

In a comment on Facebook, Economy Minister Silvio Schembri said the HICP data “confirmed the need and effectiveness” of the stability scheme.

“This does not mean that we have reached our goal, but we are reaping the results of our work and as a government we remain determined to continue fighting inflation,” Schembri said.

The HICP index shows that apart from food and non-alcoholic beverages, the second and third largest upward impacts were measured in the Restaurants and hotels Index (+0.61 percentage points) and the Housing, water, electricity, gas and other fuels Index (+0.41 percentage points), mainly on account of higher prices of restaurant services and rents, respectively.

The downward impacts on annual inflation were registered in the Communication Index (-0.39 percentage points) and the Recreation and culture Index (-0.09 percentage points), mainly reflecting lower prices of mobile phone services and package holidays, respectively.