Harmonised Index of Consumer Prices: December 2020​

20 January 2021 | 1100 hrs | 009/2021

Harmonised Index of Consumer Prices (HICP): December 2020

1. Main points

• In December 2020, the annual rate of inflation as measured by the Harmonised Index of Consumer Prices (HICP) remained at a constant rate of 0.2 per cent (Table 2).
• The twelve-month moving average rate for December stood at 0.8 per cent (Table 2).
• The largest upward impact on annual inflation was measured in the Food and Non-alcoholic Beverages Index, while the largest downward impact was recorded in the Clothing and Footwear Index (Chart 2).

Chart 1. Inflation rates

per cent

3.0

2.5

2.0

1.5

1.0

0.5

0.0
	J F M A M J J A S O N D	J F M A M J J A S O N D	J F M A M J J A S O N D
	2018				2019			2020
					period
			Annual rate			12-month moving average rate

Details on the compilation of the HICP within the context of COVID-19 are available in the methodological notes.

Compiled by: Price Statistics Unit

Contact us: National Statistics Office, Lascaris, Valletta VLT 20001 T. [phone], E. [e-mail]

https://twitter.com/NSOMALTA/		https://www.facebook.com/nsomalta/

2. Overview

The HICP measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services. The HICP is calculated according to rules specified in a series of European Union Regulations that were developed by Eurostat in conjunction with the EU Member States. The HICP is used to compare inflation rates across the European Union. A closely related measure of price movements is the Retail Price Index (RPI). For a description of the differences between the HICP and the RPI, refer to Section 5.2 of this news release.

Each monthly HICP News Release includes three different measures of inflation:

1. 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.
2. The monthly inflation rate compares price changes between the reference month and the previous month. This measure can be highly influenced by seasonal effects.
3. 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.

3. Price changes and effects on inflation

Table 1 shows that the highest annual inflation rates in December 2020 were registered in the following divisions: Education (4.8 per cent) and Health (2.3 per cent). On the other hand, the lowest annual inflation rates were registered in Clothing and Footwear (-3.9 per cent) and Communication (-1.3 per cent).

Table 1. HICP indices

Average 2015=100 1

			Indices		Annual	Monthly
Division	Weight			rate (%)	rate (%)
(%)
	Dec 2019	Nov 2020	Dec 2020	Dec 2020	Dec 2020
Food and Non-alcoholic Beverages	160.55	111.79	113.76	113.18	1.2	-0.5
Alcoholic Beverages and Tobacco	36.49	108.24	108.81	108.56	0.3	-0.2
Clothing and Footwear	48.96	104.79	98.34	100.71	-3.9	2.4
Housing, Water, Electricity, Gas and	85.44	106.16	106.62	106.88	0.7	0.2
Other Fuels
Furnishings, Household Equipment and	77.55	108.07	106.74	107.27	-0.7	0.5
Routine Household Maintenance
Health	40.50	107.38	109.67	109.81	2.3	0.1
Transport	136.84	103.18	101.39	102.29	-0.9	0.9
Communication	32.87	96.53	95.65	95.31	-1.3	-0.4
Recreation and Culture	102.90	99.73	99.86	99.97	0.2	0.1
Education	22.62	107.17	112.27	112.27	4.8	0.0
Restaurants and Hotels	178.25	92.68	95.12	92.51	-0.2	-2.7
Miscellaneous Goods and Services	77.03	106.46	108.06	107.94	1.4	-0.1
All Items	1,000.00	103.44	103.93	103.61	0.2	-0.3

• see methodological note 5.3

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.

In December 2020, the largest upward impact on annual inflation was registered in the Food and Non-alcoholic Beverages Index (+0.20 percentage points), largely due to higher prices of fruit. The second and third largest impacts were measured in the Education Index (+0.11 percentage points) and the Miscellaneous Goods and Services Index (+0.11 percentage points), mainly on account of higher prices of private school fees and hairdressing services respectively (Chart 2).

The largest downward impacts on annual inflation were registered in the Clothing and Footwear Index (-0.19 percentage points), the Transport Index (-0.12 percentage points) and the Furnishings, Household Equipment and Routine Household Maintenance Index (-0.06 percentage points), mainly reflecting lower prices of garments, fuels and furniture respectively (Chart 2).

Chart 2. Contribution to the annual inflation rate by the 12 main divisions: December 2020

Food and Non-alcoholic Beverages												0.20
Education										0.11
Miscellaneous Goods and Services										0.11
Health										0.09
Housing, Water, Electricity, Gas and Other Fuels								0.06
Recreation and Culture								0.02
Alcoholic Beverages and Tobacco								0.01
Restaurants and Hotels					-0.03
Communication					-0.04
Furnishings, Household Equipment and				-0.06
Routine Household Maintenance
Transport		-0.19	-0.12
Clothing and Footwear
-0.30	-0.20	-0.10	0.00	0.10	0.20	0.30
						percentage points

Note: A percentage point is the arithmetic difference between two percentages.

			Table 2. Inflation rates by year and month
		2018		2019		2020
Month	Annual rate		12-month	Annual rate		12-month	Annual rate		12-month
	moving		moving		moving
	(%)		average rate	(%)		average rate	(%)		average rate
			(%)			(%)			(%)
January	1.2		1.2	1.0		1.7	1.4		1.6
February	1.3		1.2	1.3		1.7	1.1		1.5
March	1.3		1.3	1.3		1.7	1.2		1.5
April	1.4		1.3	1.7		1.7	1.1		1.5
May	1.7		1.3	1.7		1.7	0.9		1.4
June	2.0		1.4	1.8		1.7	1.0		1.3
July	2.1		1.5	1.8		1.7	0.7		1.2
August	2.4		1.6	1.9		1.7	0.7		1.1
September	2.5		1.7	1.6		1.6	0.5		1.0
October	2.1		1.8	1.4		1.5	0.6		1.0
November	1.4		1.8	1.3		1.5	0.2		0.9
December	1.2		1.7	1.3		1.5	0.2		0.8

3

4. HICP (Malta and euro area)

This section compares the Maltese HICP with the euro area counterpart for the latest available data, that is, November 2020. In November, the annual rate of change registered by the Maltese HICP All-Items Index was

1. per cent, 0.5 percentage points higher than the -0.3 per cent registered for the euro area (Chart 3). The annual rate of change for the Maltese All-Items HICP excluding energy and unprocessed food was 0.2 per cent,

1. percentage points lower than the 0.4 per cent registered for the euro area (Chart 4).

Chart 3. All-Items HICP in Malta and the euro area

2.5

2.5

annual rate of change (%)

2.0	2.0
1.5	1.5

1.0	1.0
0.5	0.5
0.0	0.0

-0.5		-0.5

difference (percentage points)

-1.0								-1.0
J F M A M J J A S O N D	J F M A M J J A S O N D	J F M A M J J A S O N
		2018		2019			2020
					period	Euro area (annual rate of change)
	Difference		Malta (annual rate of change)

Source: Eurostat

Chart 4. All-Items HICP excluding energy and unprocessed food in Malta and the euro area

	2.5			2.5
	2.0			2.0
annual rate of change (%)	1.5			1.5	difference (percentage points)
1.0			1.0
0.5			0.5
0.0			0.0
	-0.5			-0.5
	-1.0			-1.0
	J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N
source: Eurostat	2018	2019	2020
	period

Difference		Malta (annual rate of change)		Euro area (annual rate of change)

Source: Eurostat

4