‘Stabbiltà’ scheme continues halting inflation surge

May saw retail prices in Malta plummet to a three-year low.

Malta’s retail prices continued their downward trend in May, reaching a 1.5% inflation rate. This marks the lowest point in three years, edging closer to the 1.3% rate seen in May 2021 during the pandemic. While inflation continues to rise in many parts of Europe, Malta is experiencing a welcome slowdown in price increases.

The highest rate of inflation in recent years in Malta was observed in October 2022, when the National Statistics Office reported a rate of 7.5%, or five times the current rate. Back then the rate of inflation in food prices had almost touched 14%. By last January this rate had fallen to just over 9%. Then, after the introduction of the ‘Stabbiltà’ scheme, the rate halved to 4.5%. Official statistics indicate that, on average, food prices have nearly returned to the level they were last November.

In fact, an analysis of trends in the level of the food price index shows that Malta had the biggest difference in trend since the beginning of February, just when ‘Stabbiltà’ came into force. In the four months prior to the start of February, food prices in Malta had risen by 4%, while in the following four months they decreased by 1.4%. This means that there has been a 5.3% change in the trend of food prices.

In contrast, across the European Union, in the four months before February the rate of food price inflation was only 1.6%, or less than half that in Malta. Then, in the four months since February prices in Europe rose by 0.3%; across Europe the fall in food price inflation during both periods was 1.3%, or a quarter that observed in Malta.

This is clear evidence that the change in trend in food prices in recent months in Malta has very little to do with international prices, but is a correction to a spike in prices that had happened before ‘Stabbiltà’ was put in place. It will be very important for Government to monitor the situation and ensure that, when close to the Budget, the scheme is being analysed, an effort is made to ensure that the improvements seen in recent months do not disappear once the scheme is terminated.

Photo: Gustavo Fring

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