Malta Chamber of Commerce, Enterprise and Industry CEO Marthese Portelli has stated that Government needs to address inflation in other markets, rather than seeking to insert a price cap on food items.

This comes as the majority of Malta’s supermarkets have reached an agreement with Government to drop the price of basic foodstuffs by 15 per cent from the start of February. The initiative covers over 400 products across 15 categories, with these including items such as meat, frozen vegetables, tea and coffee, among others. The reduced prices will remain in effect up until late October, when the next Government Budget is announced.

Responding to this scheme during the radio programme “Vi jew Va” on TVMNews+, she referred to The Malta Chamber’s statement released earlier this month, highlighting that it believes that the market should ultimately be a free one and that price fixing is not a “viable solution” to the rapid inflation that Malta is experiencing.

“We should have a market where the competition is one that is dynamic and strong, and we should have a market which provides the consumer with complete protection that is needed from any possible abuse,” Dr Portelli said.

However, she noted that the market must provide the consumer with the “opportunity and facility to have the liberty to choose what they want to buy and where from, without there being any direct manoeuvres that push or pull consumers towards a particular product or store.” She remarked that when discussions were ongoing about a possible price cap, The Malta Chamber immediately notified Government and the Opposition of its position, and also explained the repercussions of such an inflation control.

Dr Portelli said that the press release was published to clarify The Malta Chamber’s position as the voice of the private sector. She added that among those signing the agreement, there were some that were going to do so because “they didn’t have any other choice.”

However, she added that the issue goes over and above that, as most importantly, “Malta already has healthy competition”, something which is indicated through both facts and statistics.

In this respect, she made reference to the offers in stores advertising “buy six and get one free”, where consumers would be benefitting from a substantial discount. There are also others that provide items for free, such as water, pasta, or loyalty points for every purchase. “Those instances are also reflective of the 15 per cent decrease,” Dr Portelli explained, adding that there are also other stores which are already selling their products below the capped price.

“When you talk to the consumers themselves, it is not the first time that you hear people saying that they buy certain products from one store, and others from another store, doing so to compare the competition and choosing the best place to shop at,” Dr Portelli continued.

She affirmed that there are a number of other initiatives that could have been actioned to control inflation, particularly since the 15 per cent decrease is being worked on the Recommended Retail Price Index (RRP) of October 2023, which will undoubtedly fluctuate over the coming months.

Dr Portelli said that when one takes a look at the prices of food items abroad, particularly since we “import 80 per cent of our food”, prices from abroad have a “direct effect on prices in Malta.” “Today, the prices of these food items have already started to go down. It is important to understand that we have a time lag until stores import new batches,” she stated.

She said that the price cap is “not taking into consideration” that the RRP in other countries is going down and that in the coming months this drop will also be reflected in Malta. “As a country, we are always reacting a bit later than other countries due to importation,” she reaffirmed.

In addition to this, she remarked that statistics show that the effect on inflation that the chosen 15 categories of products have is “negligible” when compared to other causes of inflation.

“Official statistics are showing that there is a huge effect on inflation from the property market for example, the rental market, as well as takeaways. Over and above, the impact that the prices of products chosen for the price capping is minimal when compared to other food items which contribute to inflation,” Dr Portelli said. She added that the main culprit of inflation remains the property market, yet “nobody is looking at ways to address the inflation within this market.”

Additionally, she also emphasised that one needs to take note of macroeconomic challenges impacting inflation, including the war in Ukraine, the conflict in Gaza, and issues related to sea transport and climate change.

Dr Portelli said that since inflation affects everyone, a price cap like this one should have been taken to the Malta Council for Economic and Social Development (MCESD) for further discussions, especially since other matters, which are also of importance, have been discussed in the past.

“However, the issue of inflation is of paramount important and should have been given priority,” she stressed.