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Main points

- In November 2022, the annual rate of inflation as measured by the HICP was 7.2 per cent, down from the 7.4 per cent in October 2022 (Table 2).

- The 12-month moving average rate for November stood at 5.8 per cent (Table 2).

- The largest upward impact on annual inflation was measured in the Food and non-alcoholic beverages Index (+2.39 percentage points) (Chart 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:

i. 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.

Price changes and effects on inflation

The highest annual inflation rates in November 2022 were recorded in Food and non-alcoholic beverages (13.4 per cent) and Housing, water, electricity, gas and other fuels (10.4 per cent). On the other hand, the lowest annual inflation rates were registered in Communication (2.6 per cent) and Alcoholic beverages and tobacco (2.7 per cent) (Table 1).

Chart 2 depicts the impact on the annual inflation rate by the 12 ECOICOP main divisions. An impact is a measure showing the change in inflation as a result of the inclusion of an index. Such an impact takes into account both the weight and the annual rate of inflation by division.

In November 2022, the largest upward impact on annual inflation was registered in the Food and non-alcoholic beverages Index (+2.39 percentage points), largely due to higher prices of cheese. The second and third largest impacts were measured in the Housing, water, electricity, gas and other fuels Index (+1.04 percentage points) and the Restaurants and hotels Index (+1.00 percentage point), mainly on account of higher prices of house maintenance services and restaurant services, respectively (Chart 2).

On the other hand, no downward impacts on annual inflation were registered for the month of November (Chart 2).

HICP (Malta and euro area)

This section compares the Maltese HICP with the euro area counterpart for the latest available data, that is, October 2022. In October, the annual rate of change registered by the Maltese All-items HICP was 7.4 per cent, 3.2 percentage points lower than the 10.6 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, 1.2 percentage points higher than the 6.4 per cent registered for the euro area (Chart 4).

ARTICLE WRITTEN BY NSO

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