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Main points

● In December 2022, the annual rate of inflation as measured by the RPI was 7.35 per cent, up from the 7.12 per cent in November 2022 (Table 2).

● The 12-month moving average rate for December stood at 6.15 per cent (Table 2).
● The largest upward impact on annual inflation was measured in the Food Index (+2.73 percentage points) (Chart 3).

Overview

The RPI measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. A closely related measure of price movements is the Harmonised Index of Consumer Prices (HICP). A description of differences between the HICP and the RPI can be found in Section 5.2 of this news release

Each monthly RPI 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.

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

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 December 2022 were registered in Housing (19.34 per cent) and Food (12.72 per cent). On the other hand, the lowest annual inflation rates were registered in Water, electricity, gas and fuels (0.00 per cent) and Clothing and footwear (0.47 per cent) (Table 1).

Chart 3 depicts the impact on the annual inflation rate by the 10 main groups. 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 group.

In December 2022, the largest upward impact on annual inflation was registered in the Food Index (+2.73 percentage points), largely due to higher prices of take-aways. The second and third largest impacts were measured in the Housing Index (+1.53 percentage points) and the Household equipment and house maintenance costs Index (+0.59 percentage points), mainly on account of higher prices of house maintenance services and furniture, respectively (Chart 3). On the other hand, no downward impacts on annual inflation were registered for the month of December (Chart 3).

ARTICLE WRITTEN BY NSO

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