Given the seemingly never-ending spikes in the international price of oil, which has soared as high as US$135 a barrel, a rise in the electricity surcharge was inevitable but not until at least after the end of next month, Finance Minister Tonio Fenech said yesterday.
Speaking at the end of yesterday’s Malta Council for Economic and Social Development (MCESD) meeting, which treated the subject of recent rises in the cost living, Mr Fenech cited the fact that the international price of oil had almost doubled over the last year, rising 86 per cent. It was only recently, he recalled, that surpassing the US$100 mark had been unthinkable.
As a consequence, a rise in the surcharge, which has been frozen at 50 per cents, would be unavoidable.
Citing ongoing analysis, he was unable to quantify the hike until a technical analysis by Enemalta on its forward buying agreements and their expirations is undertaken. Some agreements, which are undertaken six months or a year in advance, were due to expire while others had a longer life span.
As such, he said it was too early to say what the extent of the rise would be.
Similarly, prices on international cereals markets had exploded over the last 18 months.
But despite such turmoil, Malta, Mr Fenech stressed, does not have a cost of living crisis – citing lower inflation rates over the last year, which were toward the middle of the EU tables with many countries recording much higher levels.
Malta’s primary inflationary hikes, he said, were in the food and non-alcoholic beverages category, and the restaurants and hotels category – which constituted two-thirds of the rise in the cost of living.
The former, he said, warranted a detailed study since it had a high impact on families, while the latter mainly resulted from 2006’s poor tourism season and accompanying low prices and the contrasting boom in 2007, which had driven price up.
While other price hikes were tied to seasonality issues, some were
imported while others still were of local origin.
Along these lines, Mr Fenech cited a number of ongoing investigations being carried out on the local market. These included an extensive investigation into the prices of cheese and butter and the production of milk by Malta Dairy Products.
In the case of cereals, price hikes were found to be purely attributable to international market conditions.
Other investigations have included that into school uniforms, another by the Malta Financial Services Authority into bank charges, which had also been referred to the Office for Fair Competition, and the ongoing tackling of the prices of medicines.
The removal of price stability agreements with a range of importers, enacted so prevent price discrepancies during the three months before and three months after the euro changeover, had not had an impact – with prices on the listed products having remained stable, Mr Fenech “categorically” stated.
The government, he said, had taken action against the continually rising prices of oil and cereals, and their multiple trickle-down effects, by implementing measures to boost consumers’ purchasing power. These included the last budget’s income tax cuts, children’s allowance adjustments and the advance Lm1 extra cost of living adjustment.
Such mitigating action, he said, appeared to have achieved its intended purpose and as such there was no cause for panic in terms of rising costs.
Discussions around the MCESD table continue on 6 June.