Inflation continues downward trend

Inflation in Malta continued to drop over the past three months and dipped to 2.8 per cent last month.

Though still the highest rate in the 16-member euro area, Malta continued to register lower inflation as the steep spiral caused particularly by the new utility tariffs is now settling in terms of the consumer price index.

Inflation last month was 0.6 per cent lower than a month before and 1.6 per cent below that of June 2008.

Eurostat reported that inflation in the euro area continued to drop in June, turning into deflation for the first time since the introduction of the euro in 1999.

The EU's statistical arm confirmed that the 16 member states that use the euro saw prices contract by 0.1 per cent in the year up to last June. Decreasing prices for transport fuel and heating oil were the main factors behind the drop, Eurostat said, outweighing higher prices for restaurants and cafes, tobacco, rent and electricity.

Oil prices rocketed to a record $147 a barrel in July 2008 and have now fallen by more than half to $60 a barrel this week as demand collapsed during the global economic downturn.

Eurostat's general EU inflation figures show that the lowest annual rates in June were observed in Ireland (-2.2 per cent), Portugal (-1.6 per cent), Belgium, Spain and Luxembourg (-1.0 per cent each) and the highest in Romania (5.9 per cent), Poland (4.2 per cent) and Lithuania (3.9 per cent).