The government is unlikely to follow in the footsteps of some European countries which have intervened to control prices of staple foods to mitigate inflation.
Instead, the government injected the strongest financial aid where it hit the hardest and where it mattered the most – in fuel and electricity prices, Finance Minister Clyde Caruana told Times of Malta.
“Instead of considering measures like those being employed now in other countries, this government went straight to the big measure that none of these other countries even considered: we stabilised fuel and electricity prices,” he said.
The government is expected to fork out a little less than €400 million in fuel and electricity subsidies this year to cushion the impact of international skyrocketing energy prices.
As inflation continues to soar across Europe, some governments have capped prices on staple foods or pushed grocery stores to bring down costs.
France reached an agreement with supermarket chains to reduce prices on hundreds of staple foods for three months and the UK is considering a similar measure.
We went straight to the big measure that none of the other countries even considered- Finance Minister Clyde Caruana
Other countries have forced price controls on items like cooking oil, wheat, flour and milk, and despite not imposing price controls, Spain removed all value added tax from essential products and slashed tax on cooking oil and pasta by half.
Asked whether he rules out any similar form of price controls, Caruana would only say the Maltese government adopted better measures.
“Had we followed in the footsteps of other countries, inflation in Malta today would have been higher and we would have been forced to control energy prices like the other countries are doing,” he said.
“Our approach was the boldest and most aggressive, and even though we do have inflation, it’s not as high as in other countries.”
The latest NSO figures show that the annual rate of inflation was 5.7 per cent last month, down from 5.8 per cent in April. The highest annual inflation rates in May were registered in food (10 per cent) and housing (9.7 per cent). On the other hand, the lowest rates were registered in clothing and footwear (-0.8 per cent) and water, electricity, gas and fuels (zero per cent since prices are frozen).
Nonetheless, Malta’s inflation remains lower than that of the euro area, which peaked at 10.6 per cent during 2022.
The last Times of Malta survey found the rising cost of living is the biggest concern for the Maltese. One in five see it as Malta’s biggest national problem and almost a third list it as the issue that troubles them most on an individual level.