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2 NEWS 18.11.2021 IN October 2021, the annual rate of in- flation as measured by the Harmonised Index of Consumer Prices (HICP) was 1.4 per cent, up from 0.7 per cent in September 2021, NSO statistics pub- lished yesterday reveal. The 12-month moving average rate for October stood at 0.3 per cent. The largest upward impact on annu- al infl ation was measured in the Food and non-alcoholic beverages Index (+0.53 percentage points), while the largest downward impact was record- ed in the Restaurants and hotels Index (-0.38 percentage points). The HICP measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. It is calculated ac- cording to rules specified in a series of European Union (EU) regulations that were developed by Eurostat in conjunc- tion with the EU Member States. The HICP is used to compare inflation rates across the EU; a closely related measure of price movements is the Retail Price Index (RPI). Each month, the HICP reports on three different measures of inflation: The annual inflation rate measures average price changes between the ref- erence month and the same month of the previous year. Although responsive to recent changes in price levels, this measure can be influenced by one-off effects in either month. The monthly inflation rate compares price changes between the reference month and the previous month. This measure can be highly influenced by seasonal effects. The 12-month moving average rate overcomes the volatility of the above two rates by comparing the average of the latest 12 indices to the average of the previous 12 indices. This measure is less sensitive to temporary changes in prices. Price changes and effects on inflation The highest annual inflation rates in October 2021 were recorded in Rec- reation and Culture (4.6 per cent) and Clothing and Footwear (3.2 per cent). On the other hand, the lowest annual inflation rates were registered in Communication (-2.1 per cent) and Alcoholic beverages and tobacco (0.1 per cent). The HICP depicts the impacts on the annual inflation rate by the 12 main di- visions. An impact is a measure show- ing the change in inflation as a result of the inclusion of an index. Such an im- pact takes into account both the weight and the annual rate of inflation by di- vision. In October 2021, the largest upward impact on annual inflation was reg- istered in the Food and non-alcohol- ic beverages Index (+0.53 percentage points), largely due to higher prices of vegetables. The second and third largest impacts were measured in the Recreation and culture Index (+0.34 percentage points) and the Housing, water, electricity, gas and other fuels Index (+0.26 percent- age points), mainly on account of high- er prices of pet food and house mainte- nance services respectively. The downward impacts on annual in- flation were registered in the Restau- rants and hotels Index (-0.38 percent- age points) and the Communication Index (-0.07 percentage points), mainly reflecting a lower contribution from ac- commodation services and lower prices of mobile phone services respectively. HICP (Malta and euro area) This section compares the Maltese HICP with the euro area counterpart for the latest available data, that is, Sep- tember 2021. In September, the annual rate of change registered by the Mal- tese HICP All-items Index was 0.7 per cent, 2.7 percentage points lower than the 3.4 per cent registered for the euro area. The annual rate of change for the Maltese All-items HICP excluding en- ergy and unprocessed food was 0.3 per cent, 1.6 percentage points lower than the 1.9 per cent registered for the euro area. Differences between HICP and RPI Both indices are compiled using a large and representative selection of more than 440 different goods and ser- vices for which price movements are regularly monitored. Around 10,000 separate price quota- tions are used each month to compile the Index. The methodology underlying HICP and RPI is similar, yet they differ by the following: 1. The RPI captures private house- holds only, whereas the HICP covers private households, insti- tutional households (such as re- tirement homes) and foreign vis- itors to Malta. 2. The population base year of the two indices is different. The RPI is a fixed base index with weights periodically updated in line with the Household Budgetary Sur- vey. On the other hand, the HICP is a chain-linked index with the weights reviewed on an annu- al basis. Unlike the RPI, where the sample of goods and services changes every time the weights are updated, newly significant goods and services can be intro- duced in the HICP framework on an annual basis. 3. The coverage of the HICP is based on an international classifi- cation system, COICOP (Classifi- cation of Individual Consumption by Purpose), whereas the RPI has a different set of codes for each group of items, as explained in the table below. 1 17 November 2021 | 1100 hrs | 209/2021 Harmonised Index of Consumer Prices (HICP): October 2021 1. Main points ● In October 2021, the annual rate of infl ation as measured by the HICP was 1.4 per cent, up from 0.7 per cent in September 2021 (Table 2). ● The 12-month moving average rate for October stood at 0.3 per cent (Table 2). ● The largest upward impact on annual infl ation was measured in the Food and non-alcoholic beverages Index (+0.53 percentage points), while the largest downward impact was recorded in the Restaurants and hotels Index (-0.38 percentage points) (Chart 2). https://twitter.com/NSOMALTA/ https://www.facebook.com/nsomalta/ Compiled by: Price Statistics Unit Contact us: National Statistics Offi ce, Lascaris, Valletta VLT 2000 T. +356 25997219, E. nso@gov.mt Chart 1. Infl ation rates - ) 0 $ 0 - - $ 6 2 1 ' - ) 0 $ 0 - - $ 6 2 1 ' - ) 0 $ 0 - - $ 6 2 SHUFHQW SHULRG DQQXDOUDWH PRQWKPRYLQJDYHUDJHUDWH Details on the compilation of the HICP in the context of COVID-19 are available in the methodological notes. Inflation Rate HICP Indeces Contribution to the annual inflation rate by the 12 main divisions Inflation rates by year and month 2 L LL LLL 3ULFHFKDQJHVDQGHIIHFWVRQLQIODWLRQ $QQXDO UDWH 0RQWKO\ UDWH 2FW 6HS 2FW 2FW 2FW )RRGDQGQRQDOFRKROLFEHYHUDJHV $OFRKROLFEHYHUDJHVDQGWREDFFR &ORWKLQJDQGIRRWZHDU +RXVLQJZDWHUHOHFWULFLW\JDVDQGRWKHU IXHOV )XUQLVKLQJVKRXVHKROGHTXLSPHQWDQG URXWLQHKRXVHKROGPDLQWHQDQFH +HDOWK 7UDQVSRUW &RPPXQLFDWLRQ 5HFUHDWLRQDQGFXOWXUH (GXFDWLRQ 5HVWDXUDQWVDQGKRWHOV 0LVFHOODQHRXVJRRGVDQGVHUYLFHV All-items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verage 2015=100 1 7DEOH+,&3LQGLFHV 3 Note: A percentage point is the arithmetic difference between two percentages. Annual rate (%) 12-month moving average rate (%) Annual rate (%) 12-month moving average rate (%) Annual rate (%) 12-month moving average rate (%) January 1.0 1.7 1.4 1.6 0.2 0.7 February 1.3 1.7 1.1 1.5 0.1 0.6 March 1.3 1.7 1.2 1.5 0.1 0.5 April 1.7 1.7 1.1 1.5 0.1 0.4 May 1.7 1.7 0.9 1.4 0.2 0.4 June 1.8 1.7 1.0 1.3 0.2 0.3 July 1.8 1.7 0.7 1.2 0.3 0.3 August 1.9 1.7 0.7 1.1 0.4 0.2 September 1.6 1.6 0.5 1.0 0.7 0.3 October 1.4 1.5 0.6 1.0 1.4 0.3 November 1.3 1.5 0.2 0.9 December 1.3 1.5 0.2 0.8 2021 In October 2021, the largest upward impact on annual inflation was registered in the Food and non-alcoholic beverages Index (+0.53 percentage points), largely due to higher prices of vegetables. The second and third largest impacts were measured in the Recreation and culture Index (+0.34 percentage points) and the Housing, water, electricity, gas and other fuels Index (+0.26 percentage points), mainly on account of higher prices of pet food and house maintenance services respectively (Chart 2). Chart 2 depicts the impacts on the annual inflation rate by the 12 main divisions. An impact is a measure showing the change in inflation as a result of the inclusion of an index. Such an impact takes into account both the weight and the annual rate of inflation by division. The downward impacts on annual inflation were registered in the Restaurants and hotels Index (-0.38 percentage points) and the Communication Index (-0.07 percentage points), mainly reflecting a lower contribution from accommodation services and lower prices of mobile phone services respectively (Chart 2). Table 2. Inflation rates by year and month Month 2019 2020 Chart 2. Contribution to the annual inflation rate by the 12 main divisions: October 2021 -0.38 -0.07 0.01 0.02 0.05 0.06 0.15 0.18 0.21 0.26 0.34 0.53 -0.50 -0.30 -0.10 0.10 0.30 0.50 Restaurants and hotels Communication Alcoholic beverages and tobacco Education Miscellaneous goods and services Health Clothing and footwear Furnishings, household equipment and routine household maintenance Transport Housing, water, electricity, gas and other fuels Recreation and culture Food and non-alcoholic beverages percentage points Note: A percentage point is the arithmetic difference between two percentages. Annual rate (%) 12-month moving average rate (%) Annual rate (%) 12-month moving average rate (%) Annual rate (%) 12-month moving average rate (%) January 1.0 1.7 1.4 1.6 0.2 0.7 February 1.3 1.7 1.1 1.5 0.1 0.6 March 1.3 1.7 1.2 1.5 0.1 0.5 April 1.7 1.7 1.1 1.5 0.1 0.4 May 1.7 1.7 0.9 1.4 0.2 0.4 June 1.8 1.7 1.0 1.3 0.2 0.3 July 1.8 1.7 0.7 1.2 0.3 0.3 August 1.9 1.7 0.7 1.1 0.4 0.2 September 1.6 1.6 0.5 1.0 0.7 0.3 October 1.4 1.5 0.6 1.0 1.4 0.3 November 1.3 1.5 0.2 0.9 December 1.3 1.5 0.2 0.8 2021 In October 2021, the largest upward impact on annual inflation was registered in the Food and non-alcoholic beverages Index (+0.53 percentage points), largely due to higher prices of vegetables. The second and third largest impacts were measured in the Recreation and culture Index (+0.34 percentage points) and the Housing, water, electricity, gas and other fuels Index (+0.26 percentage points), mainly on account of higher prices of pet food and house maintenance services respectively (Chart 2). Chart 2 depicts the impacts on the annual inflation rate by the 12 main divisions. An impact is a measure showing the change in inflation as a result of the inclusion of an index. Such an impact takes into account both the weight and the annual rate of inflation by division. The downward impacts on annual inflation were registered in the Restaurants and hotels Index (-0.38 percentage points) and the Communication Index (-0.07 percentage points), mainly reflecting a lower contribution from accommodation services and lower prices of mobile phone services respectively (Chart 2). Table 2. Inflation rates by year and month Month 2019 2020 Chart 2. Contribution to the annual inflation rate by the 12 main divisions: October 2021 -0.38 -0.07 0.01 0.02 0.05 0.06 0.15 0.18 0.21 0.26 0.34 0.53 -0.50 -0.30 -0.10 0.10 0.30 0.50 Restaurants and hotels Communication Alcoholic beverages and tobacco Education Miscellaneous goods and services Health Clothing and footwear Furnishings, household equipment and routine household maintenance Transport Housing, water, electricity, gas and other fuels Recreation and culture Food and non-alcoholic beverages percentage points Inflation rate in October stood at 1.4%, up by 0.7% over September

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