Slashing inflation

In March the ‘Stabbiltà’ scheme continued to lower food prices and overall inflation.

Food prices fell for the second consecutive month in March.  As a result, they are on average 2% lower than they were at the end of January. This decline was not due to international trends, as the food price index for the European Union as a whole at the end of March was virtually unchanged from its level in January.

As a result of these devlopments, Malta’s inflation rate has fallen to 2.7% in March, down from 3.7% in January. Essentially more than a quarter of the inflation rate was wiped away in just two months. The decline in inflation in Malta was double that observed in the EU’s inflation rate. As a result Malta’s inflation rate is now nearly the same as the EU average inflation rate.

Since 2020 only four countries in the EU have had a lower overall inflation, and the increase in their price level was only 2% less than that in Malta. By contrast, overall inflation in Malta was a quarter less than the EU average. Moreover, the inflation rate in Malta was just a third of that observed in Hungary, the country with the highest inflation rate over the last 50 months.

After August 2023, the inflation rate of food products in the European Union fell below that in Malta. From October the divergence became even more pronounced, with the country’s food prices starting to accelerate, while those in Europe were falling. In January the food inflation rate in Malta was 11%, as against 4.8% in the EU. Thanks to ‘Stabbiltà’, this has changed and food price inflation has started to fall again in Malta and move towards the European average. The food inflation rate in Malta has now nearly halved, falling to 6.2%, while the gap with EU food inflation is now a fifth less than what it was before ‘Stabbiltà’ started.

A clear example of this is the evolution of the price of coffee. While across Europe the price has been falling for over a year, in Malta after the summer it started to rise, reaching an inflation rate six times higher than the European average by January. In February, the rate of inflation of coffee prices in Malta fell from 15.6% to 6.5% while in March it fell to 2.8% and came much closer to the European average.

Another example is frozen vegetables. In this case, the price trend in Malta had gone against that across Europe, so much so that, while in Malta prices continued to rise, in neighbouring countries they were moderating. Following th launch of the ‘Stabbiltà’ scheme, the inflation rate of these prices in Malta halved from 14% in January to 7% in March and came very close to the rate in the Union.

The same situation characterised margarine price inflation. While across the Union inflation had fallen sharply, coming below that in Malta, after July the rate of inflation in Malta went the other way, rising rather than falling. Following the introduction of ‘Stabbiltà’, inflation in this product here in Malta decreased from a positive 9% to a negative 6%. Even here, now the trend has become like the one across Europe.

‘Stabbiltà’ has also led to a substantial change in the prices of processed fish, especially canned tuna. Again, in this case the trend in Malta was different from that in the rest of the Union. Following the introduction of the scheme, inflation changed from being more than twice the European average to a situation where prices are lower than they were a year earlier.

Finally, when it comes to cereal products, the trend in prices followed that in Europe, except from November onwards, when prices started to accelerate unlike in the rest of Europe. After ‘Stabbiltà’, inflation in this case more than halved, from 13% to less than 6% in just two months.

These are some examples of how ‘Stabbiltà’ has changed the trend in food prices and brought it back to international trends.

Photo: Getty Images

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