Maltese residents' deposits rose by 11.6% in June, according to the Central Bank's economic update.

Economic sentiment, however, fell marginally during the month, as weaker sentiment among consumers in industry and construction offset improved confidence in the services and retail sectors.

The bank said the rate of growth in deposits is relatively strong from a historical perspective. Overnight deposits were the main driver behind the acceleration in total deposits during June, as they grew by an annual 18.1% when compared with 17.1% in May.

At the same time, deposits with maturity of up to two years, which are the main component of time deposits, dropped at a slower annual rate of 8.1%, following an 8.4% decrease in May.

These developments illustrate a continued preference for holding liquid assets in an environment of low-interest rates.

Annual growth in credit to Maltese residents eased to 1% in June, from 1.3% in May, reflecting a deceleration in credit to general government. On the other hand, growth in credit to other residents edged up marginally to 1.3%.

In June, retail sales grew moderately in annual terms, while industrial production decreased slightly. In contrast, tourism activity continued to grow at a fast pace. Labour market conditions remained favourable, as employment grew and the number of registered unemployed declined further.

Price pressures remained moderate, with the annual rate of inflation based on the Harmonised Index of Consumer Prices falling to 1.0% in June.