Price changes and effects on inflation
The highest annual inflation rates in March 2023 were registered in Housing (14.58 per cent) and Food (11.78 per cent). On the other hand, the lowest annual inflation rates were registered in Water, electricity, gas and fuels (0.00 per cent), and Transport and communication (1.92 per cent) (Table 1).
Chart 1. Inflation rates
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Chart 2. Annual inflation rates by the 10 main groups
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Note: The Food Index includes restaurant services and take-aways.
Chart 3 depicts the impact on the annual inflation rate by the 10 main groups. 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 group.
In March 2023, the largest upward impact on annual inflation was registered in the Food Index (+2.53 percentage points), largely due to higher prices of take-aways. The second and third largest impacts were measured in the Housing Index (+1.15 percentage points) and the Other goods and services Index (+0.57 percentage points), mainly on account of higher prices of house maintenance services and cleaning products, respectively (Chart 3).
No downward impacts on annual inflation were registered for the month of March (Chart 3).
Chart 3. Contribution to the annual inflation rate by the 10 main groups
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- The Food Index includes restaurant services and take-aways.
- A percentage point is the arithmetic difference between two percentages.
In March, the Housing Index registered the highest annual inflation rate at 14.58 per cent (Table 1), of which Rent registered an annual rate of 10.36 per cent, Materials for house maintenance registered an annual rate of 13.25 per cent and Services for house maintenance registered an annual rate of 17.39 per cent (Table 3).
The Water, electricity, gas and fuels Index registered the lowest annual inflation rate of 0.00 per cent (Table 1), since the prices of all subcomponents remained unchanged (Table 3).
Methodological Notes
1 Overview
The RPI measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. A closely related measure of price movements is the Harmonised Index of Consumer Prices (HICP). A description of differences between the HICP and the RPI can be found in methodological note 3 of this news release.
Each monthly RPI news release includes three different measures of inflation:
- The annual inflation rate measures average price changes between the reference 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.
2. Accessing data
NSO new releases and further information on HICP and RPI may be accessed from here.
Eurostat news releases on HICP may be accessed from Eurostat’s website.
3 Differences between RPI and HICP
Both indices are compiled using a large and representative selection of more than 480 different goods and services, for which price movements are regularly monitored. More than 18,000 separate price quotations are used each month to compile the index.
The methodology underlying RPI and HICP is similar, yet they differ by the following:
i. The RPI captures private households only, whereas the HICP covers private households, institutional households (such as retirement homes) and foreign visitors to Malta.
ii. The population base year of each index is different. The RPI is a fixed base index with weights periodically updated in line with the Household Budgetary Survey (HBS). On the other hand, the HICP is a chain-linked index with the weights reviewed on an annual 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 introduced in the HICP framework on an annual basis.
iii. The coverage of the HICP is based on an international classification system, ECOICOP (European Classification 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.
| ECOICOP division | Weight (out of 1000) | RPI group | Weight (out of 100) | ||||
|---|---|---|---|---|---|---|---|
| 1 | Food and non-alcoholic beverages | 177.20 | Food (including restaurant services and take-aways) | 21.49 | |||
| 2 | Alcoholic beverages and tobacco | 36.31 | Beverages and tobacco | 5.56 | |||
| 3 | Clothing and footwear | 41.96 | Clothing and footwear | 6.62 | |||
| 4 | Housing, water, electricity, gas and other fuels | 100.94 | Housing | 7.90 | |||
| 5 | Furniture, household equipment and routine household maintenance | 84.51 | Water, electricity, gas and fuels | 3.31 | |||
| 6 | Health | 47.64 | Furnishings and household equipment | 6.97 | |||
| 7 | Transport | 124.53 | Transport and communication | 22.10 | |||
| 8 | Communication | 39.92 | Personal care and health | 8.81 | |||
| 9 | Recreation and culture | 85.01 | Recreation and culture (including education) | 9.90 | |||
| 10 | Education | 26.81 | Other goods and services | 7.34 | |||
| 11 | Restaurants and hotels | 155.71 | |||||
| 12 | Miscellaneous goods and services | 79.46 | |||||
| Total | 1000.00 | Total | 100.00 |
Apart from the disparities identified above, both the RPI and the HICP:
- have the same geographic coverage, implying that both indices refer to the whole country;
- utilise the same price collection methodologies; and,
- utilise the same outlet sample (with some exceptions).
4. Explaining Divergences between RPI and HICP Inflation
The HICP and RPI price indices bear several similarities and often produce similar inflation estimates. However, in some cases, inherent methodological differences between the two indices, particularly differences in the consumption basket and in the weights given to these products, cause the inflation rates reported by these two measures to diverge.
5. Further information
Price quotations for the new items introduced in the latest RPI index series started being collected in December 2016.
From January 2017, the RPI started being published with December 2016 as its base. All RPI indices pertaining to the years prior to 2017 were re-based to December 2016=100. This latest index series may be linked to the previous one by using a linking coefficient of 1.1199.
The basket of consumption items considered for the RPI is reviewed periodically, in line with the HBS, during which, information about household consumption is collected over a 12-month period, in order to obtain an estimate of the average household expenditure. New products are included in the basket of items when achieving a sales volume of over one part per thousand of total consumer expenditure covered by the RPI. The information collected through the HBS exercise is then further supplemented by additional data sources to obtain the final RPI weights.
The HICP is published with 2015 as its base year. The previous series with reference 2005=100 has been discontinued. Commission Regulation (EU) No 2015/2010 provides the legal basis for updating the HICP reference year from 2005=100 to 2015=100. It should be noted that the re-basing operation was conducted after rounding all past indices to one decimal place. Therefore, there might be slight differences when comparing this series with past data due to rounding.
The HICP largely follows National Accounts (NA) concepts of what constitutes household consumption in determining the index scope, and mainly uses NA data to weight the items in the basket.
The HICP weighting scheme is annually updated in accordance with Commission Regulation (EU) No 1114/2010. The treatment of seasonal items is in accordance with Commission Regulation (EC) No 330/2009.
Figures in Table 3 may not add up mainly due to additivity and the change in weights and basket of items in January 2017.
Users are advised to consult the NSO before comparing the results of the RPI and the HICP.
More information on the metadata behind HICP and RPI news releases may be accessed from:
ECOICOP division classification
ECB digital publication on inflation
References to this news release are to be cited appropriately.
6. Publication Policy
A calendar for upcoming news releases is available online.
7. Reassessments / revisions
Note that the RPI series is published with reference base December 2016, whereas the HICP series is published with base year 2015, in line with Eurostat base year revisions.
8. Time series
Data from 1946 onwards is accessible through the following link in the selected indicators section (Index of Inflation).
- In March 2023, the annual rate of inflation as measured by the RPI was 6.95 per cent, down from 7.11 per cent in February 2023 (Table 2).
- The 12-month moving average rate for March stood at 6.85 per cent (Table 2).
- The largest upward impact on annual inflation was measured in the Food Index (+2.53 percentage points) (Chart 3).
