Inbound tourism and food inflation

Inbound Tourism & Food Inflation

We now have the full data with regards Inbound Tourism figures for Q1 2024 (January to March) as can be seen below I have re-adjusted the inbound tourist total expenditure for inflation to 2019 levels, for both Q1 2023 and Q1 2024.

The end results is simple to see. Whilst between Q1 2019 to Q1 2024 we managed to increase the number of inbound tourists by 36%, the real total expenditure has increased by 28%. This meant that the average real expenditure per tourist has dropped from €638.45 in Q1 2019 to €600.39 in Q1 2024.  As I have previously written out, the challenge to increase expenditure from inbound tourists at a higher pace than the increase in the number of incoming tourists, remains. This is a challenge we need to win, if tourism is to remain a sustainable economic activity in Malta.

On the 17th May, the full HICP inflation figures for April 2024 where published by Eurostat. With the April 2024 HICP statistics out, we can see how the divergence between overall Food prices in Malta and the Euro Area average has developed. As shown below the divergence experienced with regards the annual change in HICP for April 2024 (+4%) for All Food, is slightly lower than that experienced in March 2024(+4.4%), but still well above the divergence experienced from June 2023 to November 2023.

However, the above is just an initial analysis which merits a deeper dive to really understand what is happening. To do so, let us first examine the divergence between the Euro Area Average and Malta with regards the Annual change in HICP for April 2024 with regards Processed Food (excluding Alcohol & Tobacco). When analysing Processed Food we see that the divergence in April 2024 (+3.1%), just slightly below the divergence in March 2023 (+3.4%) but still very much above the divergence level experienced from August 2023 to December 2023.

If we do the same and now examine the divergence between the Euro Area Average and Malta with regards the Annual change in HICP for April 2024 with regards Unprocessed Food, we see that the divergence in April 2024 (+3.1%) was above the divergence experienced from July 2023 to November 2023 and below the divergence experienced in December 2023 (+5.4%), January 2024 (+6.5%) and March 2024 (+4.1%) and at par with the divergence in February 2024 (+3.1%).

To have a more detailed look, below please find detailed figures for certain popular food categories, which compares the Euro Area Average and Malta’s Annual HICP rates from August 2023 to April 2024.

The above figures outline that for the vast majority the divergence between the Euro Area Average and Malta’s HICP annual rate of change per month has remained the same in April 2024 OR was lower for the Euro Area than Malta, with the exception of Pasta and Preserved Milk.  

However, when I see all the above graphs and figures, what really stands out is the divergence in food prices in Malta when compared to the Euro Area average, that really picked up pace in the last 3 months of 2023. The million-dollar question that remains unanswered, is what happened in the Maltese food market in Malta that suddenly led to a divergence in food prices in Malta when compared to the Euro Area Average? A divergence that was not seen before the end of 2023 and that basically remains in place by end April 2024.