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1. Main points

● In December 2022, the annual rate of inflation as measured by the HICP was 7.3 per cent, up from the 7.2 per cent in November 2022 (Table 2).

● The 12-month moving average rate for December stood at 6.1 per cent (Table 2).

● The largest upward impact on annual inflation was measured in the Food and non-alcoholic beverages Index (+2.41 percentage points) (Chart 2).

2. Overview

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. A closely related measure of price movements is the Retail Price Index (RPI). A description of the differences between the HICP and the RPI can be found in Section 5.2 of this news release.

Each monthly HICP news release includes three different measures of inflation:

The annual inflation rate measures average price changes between the reference month and the same month of the previous year. Although responsive to recent changes in price levels, this measure can be influenced by one-off effects in either month.

ii The monthly inflation rate compares price changes between the reference month and the previous month. This measure can be highly influenced by seasonal effects.

iii The 12-month moving average rate overcomes the volatility of the above two rates by comparing the average of the latest 12 indices to the average of the previous 12 indices. This measure is less sensitive to temporary changes in prices.

3. Price changes and effects on inflation

The highest annual inflation rates in December 2022 were recorded in Food and non-alcoholic beverages (13.5 per cent) and Housing, water, electricity, gas and other fuels (10.6 per cent). On the other hand, the lowest annual inflation rates were registered in Alcoholic beverages and tobacco (2.3 per cent) and Communication (2.4 per cent) (Table 1).

4. HICP (Malta and euro area)

This section compares the Maltese HICP with the euro area counterpart for the latest available data, that is, November 2022. In November, the annual rate of change registered by the Maltese All-items HICP was 7.2 per cent, 2.9 percentage points lower than the 10.1 per cent registered for the euro area (Chart 3). The annual rate of change for the Maltese All-items HICP excluding energy and unprocessed food was 7.6 per cent, 1.0 percentage point higher than the 6.6 per cent registered for the euro area (Chart 4).

ARTICLE WRITTEN BY NSO

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