Updated with the prime minister's comments below.
The Chamber of Commerce has hit out at government attempts at pressuring retailers to agree to price cuts for essential food items, saying on Sunday that the administration should instead be focused on systematic measures against inflation.
In a reaction a few hours later, Prime Minister Robert Abela said that while inflation was falling for many items, food appeared to be an exception, and the government would continue to work to bring stability in this sector too.
Times of Malta reported last week that supermarket owners and importers are facing government pressure to reduce the recommended prices of a range of staple grocery products by up to 15 per cent starting this month, as inflation continues to bite.
The chamber said in a statement that the way the government was negotiating the scheme was of particular concern. Market operators were being contacted individually by the government and prodded into complying.
It described the government's actions as price control that was reminiscent of decades ago when consumer protection came at the expense of consumer choice, and the government controlled the market instead of promoting competition through proper monitoring and regulation.
"The Malta Chamber firmly asserts its position against such direct intervention in the market, not only as a matter of principle but also because such intervention will only stifle competition to the detriment of all," the chamber said.
"Rather than protecting the consumer, such interventions direct the consumer to purchase a highly restrictive basket of food items selected by government. This approach, which seems more cosmetic than effective, is essentially masking and not addressing the situation. The extent to which it can be successful in reducing the prices of such items is dubious because several retail businesses already apply substantial discounts to basic items as a matter of normal business."
The chamber also warned that the government's measures would make other items which may be superior in quality and nutritional value relatively more expensive, thereby encouraging people to shift their consumption towards inferior products.
"Price fixing is not a viable solution to the complex issue of inflation. Such a move will not yield the desired systematic control of increasing costs because it does not address the root causes of inflation," it insisted.
It argued that inflation in the prices of imported food stemmed from rising logistical costs and spiralling wage growth and it was similar to what has been registered in other European countries where it was fuelled largely by higher energy costs and the war in Ukraine.
It said that fiscal policies that fuel inflation by stimulating demand, coupled with a lack of preparedness for the impact of EU policies impacting transportation costs had exacerbated the situation.
"The local subsidisation of energy and wheat does not shield us from these global impacts on imported food prices," it said.
The chamber underlined the importance of free competition and insisted that the Malta Competition and Consumer Affairs Authority (MCCAA) should ensure that the market functioned well.
It said it was open to discussing effective solutions and was supportive of sensible policies.
Prime Minister: More measures to help people cope with the cost of living
Prime Minister Robert Abela spoke on food prices at a Labour Party activity later on Sunday.
He said the Cabinet last week discussed further measures to help the people cope with the cost of living.
"While price inflation is decreasing for many items food prices appear to be an exception," Abela complained.
He said the government would not give up and wanted to ensure that in this sector too it could guarantee stability. Efforts to this end would continue in the coming days and weeks in line with the people's pleas.