(Adds ministry's statement)

Growing inflation in Malta was one of the reasons for the bad certificate obtained by Malta from credit rating agency Moody's, Labour Party spokesman Karmenu Vella said in a statement.

Mr Vella said that in the past years, inflation in Malta was much higher than in other European countries, especially when it came to food and energy prices.

The high inflation rate was destroying many economic sectors by reducing their competitiveness and profit. It was also having a bad effect on families.

Mr Vella said that in the past five years, the average wage in the EU increased by 12.5 per cent while inflation increased by nine per cent. In the same period, wages in Malta increased by five per cent when inflation rose by 9.5 per cent. This showed that wages in Malta were not even covering inflationary costs.

And rather than working to solve the problem, the government was increasing it through additional taxes and tariffs, Mr Vella said.

MINISTRY'S STATEMENT

In a reply, the Finance Minister said that it was not true that the Maltese economy was not growing at a good rate.

Moody’s recognised the fact that Malta had responded well to the economic and financial crisis, so much so that economic growth in Malta last year was among the highest among EU countries.

This year the Maltese economy grew by 2.8 per cent while the EU’s economy grew at an average rate of 1.6 per cent.

Moody’s, the Finance Ministry said, attributed the reason for its reclassification to the uncertain situation in Malta’s neighbour states.