Background information

Despite Government measures to subsidise the cost of fuels, electricity, grains and animal feeds, the price of foods in Malta continued to rise throughout 2023. Factors such as Malta's limited domestic production of food and rising prices of imported foods and logistics contributed to this. In view of this, following discussions with individual larger retailers and importers, the Government announced that the prices of 400 food items were to be reduced by 15% from 1 February 2024.

Content of measure

The Government noted how it supported organisations via various measures during COVID-19 and the Ukraine war and because of this, it commenced discussions with individual large retailers in November 2023, arguing that these could give something back to society. It also argued that a stronger economy would ultimately benefit them. The Government explained how 15 categories of food products, with 400 products, were identified as those most impacted by inflation and consumed by the Maltese population. Consequently, it was announced that an agreement had been reached with importers and retailers to lower the recommended retail price (RRP) by at least 15%.

Furthermore, the Government also announced a measure to support smaller organisations that do not benefit from economies of scale. Stores with a turnover of less than €800,000 a year will be provided with €125 a month to compensate for the reduction in profits.

In order for consumers to identify participating stores, these are listed on a Government website (https://ekonomija.gov.mt/) and are provided with a sticker for their entrance.

Use of measure

In mid-January 2024, it was announced that at least 200 stores had agreed to form part of this scheme, and that the number was expected to continue growing.

Contents

• Other topics

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Sector specific set of companies Importing/Exporting companies	Applies to all citizens

Actors and funding

Actors	Funding
National government Company / Companies	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	No involvement
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Company level

Involvement

Food importers had been under public pressure after Maltese Labour MEP Alex Agius Saliba asked the European Commission to investigate Maltese food importers for anti-trust violations. Food importers rejected this and stated that food prices were higher in Malta than in many European countries due to logistical difficulties encountered during importation. The Times of Malta (4 January 2024) reported that "the Economy Ministry has contacted operators directly to secure agreements, pressuring others to join the scheme rather than risk any damage to their reputation." Sources of the newspaper expressed their dismay at the Government's approach.

Views and reactions

The Malta Chamber of Commerce criticised the Government's actions and stated that it amounted to price fixing, whilst also reducing consumers' choice.

The Malta Employers Association (MEA) also did not show support for the measure, and argued that making the Cost of Living Allowance (COLA) tax-free would have had a much greater impact upon individuals' purchasing power.

The Chamber of SMEs stated that it was unfair that this sector was asked to singlehandedly take the burden for inflation and warned against artificial interventions in a free market economy.

An exercise by the Times of Malta (2024, January 21) showed that consumers are likely to save very little through the measure, as many outlets already priced their items below the RRP: in some cases, substantially so. This however was sometimes not the case in smaller outlets.

The Anti-Poverty Forum, a coalition of 17 NGOs dedicated to social welfare in Malta, however, applauded the Government's initiative, describing it as much needed, and calling for further action.

The Nationalist Party (PN), the opposition party, criticised the measure and stated that the Government should instead develop a holistic plan to tackle inflation.

In September 2024, the Malta Chamber of Commerce stated that the measure had very little impact, arguing that a reduction in inflation and food prices was secondary to a reduction in international food prices, and not due to this measure. The Chamber called for the measure to end, stating that any extension of the measure would simply be a PR exercise. The Chamber also criticised the manner in which it had been introduced, with the reductions in prices being 'imposed' on many of its members.

Sectors and occupations

This case is not occupation-specific.

Sources

• 05 January 2024: Times of Malta - Push to reduce prices of dozens of grocery products by up to 15% (timesofmalta.com)
• 18 January 2024: Times of Malta - Prices of 400 food items to be reduced by 15% from February 1 (timesofmalta.com)
• 21 January 2024: Times of Malta - Food items cuts: How much will I save? Probably nothing, or close to nothing (timesofmalta.com)
• 23 January 2024: Times of Malta - Tax-free COLA ‘more effective’ way to mitigate inflation – employers (timesofmalta.com)
• 30 January 2024: Malta today - Anti-Poverty Forum applauds government's push for affordable basics, urges targeted subsidies for low-income families (www.maltatoday.com.mt)
• 20 August 2024: Central Bank - An analysis of food inflation in Malta over the last three years (www.centralbankmalta.org)
• 08 September 2024: Malta Independent - Impact of Stabbiltà was ‘negligible’, extension would be a ‘PR exercise’ - Malta Chamber of Commerce (www.independent.com.mt)
• 18 September 2024: Newsbook - Stabbiltà price-fixing deal to end as inflation falls (newsbook.com.mt)