The Central Bank of Malta’s October Economic Update shows business conditions remained below their historic average and weakened marginally in September, amid uneven sectoral activity and a moderating property market. Inflation measured by the Harmonised Index of Consumer Prices rose to 2.4% from 2.0% in August, driven by services and food. It remained below the euro area rate because government support measures kept Malta’s energy prices unchanged. Industrial production grew 5.1% annually in August, up from 4.0% in July, while tourist expenditure increased 14.9%. By contrast, retail activity contracted for the first time since April 2025, and services production grew just 0.4% in July. Residential property transactions and preliminary sale agreements fell in September compared with both August and a year earlier. Residential permits also declined, returning broadly to their average level over the past five years. Consumer confidence strengthened, supported by expectations of major purchases, while unemployment remained at 3.4% in August, unchanged from July but higher than a year earlier. Annual growth in residents’ deposits slowed to 8.1% in August from 8.3% in July, while credit growth eased to 7.4% from 7.7%. The credit slowdown reflected a steeper decline in lending to general government rather than a broad weakening across borrowers. Household loan growth edged up to 10.1%, while lending growth to nonfinancial corporations eased to 13.7%. Public finances also showed spending growing faster than revenue. The Consolidated Fund deficit reached EUR 376.2 million in the year to August, compared with EUR 203.4 million a year earlier, as higher spending on social benefits, health care, energy support and capital projects outweighed strong tax receipts.

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