Why was the ‘Stabbiltà’ initiative necessary?

Back in June processed food inflation was 13% in Malta and 14% in the euro area. In December inflation in Malta was 9% while in the euro area it had fallen to less than 6%.

The Opposition has been arguing that the Government was unfair when it selected certain processed food items as part of the ‘Stabbiltà’ price stability scheme. It is stressing that, in this sector, there is a lot of competition and prices follow international trends. But what do facts and figures show?

The Eurostat database shows that whereas this might have been the case till mid-2023, in recent months this is no longer true. Back in June processed food inflation was 13% in Malta and 14% in the euro area. In December inflation in Malta was 9%, while in the euro area it had fallen to less than 6%. The drop in inflation in Malta was half that in the euro area.

Take, for instance, the movement in the price of coffee in Malta. In June this was 14% higher than a year before. In December it was 16% higher. In Italy, inflation fell from 7% to 2%. Some argue that Maltese importers might have been affected by some increase in transport costs, but in another island state, Cyprus, in June coffee prices were up 16% on a year-ago basis, but by December inflation had fallen to 1%. 

With regard to frozen vegetables, in June the price of frozen vegetables in Italy was 16% higher than it had been a year earlier. By December this rate had fallen to 5%. Similarly, in Cyprus, from 13% in June inflation fell to 5% in December. What about Malta? Well inflation was 8% in June and 14% in December.

If we take margarine, in June inflation in Malta was lower than it was in either Italy or Cyprus. By December Malta’s inflation rate in this item was again the highest of the three countries. The same goes for bakery products and preserved or processed fish (i.e. canned tuna).

These are just five of the many processed food sub-indices of the harmonised index of consumer prices (HICP), now incidentally all covered by the ‘Stabbiltà’ initiative. The story is the same. Until June inflation mirrored that in Italy, but then prices in Malta stayed where they were or even rose, while in Italy they fell. In this light, the government decided that not intervening in such an environment was not an option.#

Inflation in particular food sub-indices of the HICP

 2023 June2023 December
Coffee  
Italy7%2%
Malta13%16%
Cyprus16%1%
   
Frozen vegetables  
Italy16%5%
Malta8%14%
Cyprus13%5%
   
Preserved or processed fish  
Italy11%7%
Malta15%15%
Cyprus6%2%
   
Bakery products  
Italy14%6%
Malta16%11%
Cyprus9%4%
   
Margarine and other vegetable fats  
Italy18%4%
Malta12%10%
Cyprus21%0%
Source: Eurostat

Photo: Markus Winkler

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