Malta still tops euro area inflation despite drop

Malta's inflation rate dropped last month for the first time in the past year, falling by just over half a percentage point when compared to the high of four per cent in April.

Notwithstanding the decline, Malta is still at the top of the eurozone's inflation league. At 3.4 per cent, the rate is still by far the highest in the 16-member euro area although it is the island's lowest for the past 12 months after inflation started spiralling upwards on the back of the new utility rates.

The month-on-month drop indicates that the impact of the rates introduced last year have started to settle into the economy. Due to the impact of the recession, May inflation in the euro area continued to fall, reaching an average record low of zero per cent. The closest inflation rate to Malta was 1.5 per cent in Finland and the Netherlands while many countries recorded deflation.

When all the 27 EU member states are taken into account, the average inflation rate in May stood at 0.7 per cent.

Eurostat said the lowest annual rates in the EU were observed in Ireland (-1.7 per cent), Portugal (-1.2 per cent), Spain and Luxembourg (both -0.9 per cent), and the highest in Romania (5.9 per cent), Lithuania (4.9 per cent) and Latvia (4.4 per cent).

Compared to April 2009, annual inflation fell in 24 member states, remained stable in one and rose in one, excluding Malta.

Ivan Camilleri, Brussels