In the recent Outlook for the Maltese Economy report, issued by the Central Bank of Malta, there was a detailed analysis on food inflation. In this analysis the following was stated: “Given the spatial limitations for food production, Malta imports around 70% of its food products (Rapa, 2022).5 Consequently, the Maltese islands are particularly susceptible to developments in international food prices. Moreover, being an island in the periphery, transport costs are a key factor to retail prices.”
This obviously implies that any analysis of food inflation in Malta and whether this is somehow being controlled or otherwise, can only be done if the relevant statistical data is compared to the Euro Area Average, as much of the food consumed in Malta comes from Europe. This comparison could also provide a strong indication of whether the reduction in food inflation in Malta is influenced by changes in food inflation across Europe or by other factors.
Graph 1 shows that if we are to compare the HICP Annual Rate (monthly) for Food from August 2023 to July, the Malta rate and Eura Area average rate was actually closer from August 2023 to October 2023 and then widened immensely from December 2023. The difference between the Malta rate and the Euro area rate has never reverted to the one seen until October 2023.
It would make sense to have a closer look and compare the HICP Annual Rate (monthly) for Processed and Unprocessed food, for Malta and the Euro Area average rate.
As shown above, in both cases, the difference between the Malta rate and the Euro Area average rate experienced until end October 2023, was never experienced in subsequent months until end July.
With regards Processed Food, the difference between the Malta rate and the Euro Area average rate was the lowest for 2024, in June and July and was at par to that in November 2023 and still higher than the difference we had from August 2023 to October 2023.
If we are to have a look at the HICP Annual Rate (monthly) for the Euro Area average and Malta for a number of leading food types the results would be as shown in the table.
From the table above it can be clearly seen that the food types, which have seen a faster decline in prices in Malta than the Euro Area average, were beef and veal, preserved and processed fish, preserved milk, butter, margarine, frozen vegetables and coffee. The rest that is bakery products, pasta, breakfast cereals, pork, dried salted or smoked meat and tea, have seen a mirroring of price changes in Malta to the Euro Area average.