The Malta Federation of Industry (FOI) is seriously concerned that annual inflation rate increased to a new high level of 3.11 per cent in June.

The federation said yesterday that the relentless increase in the water, electricity, gas and fuels index were of particular concern to local industry, adding that this index has increased by 41 per cent since June 2005 and by 15 per cent since the beginning of this year.

“This is undermining the competitiveness of local enterprises, especially micro and small enterprises, which provide thousands of jobs. These enterprises are, in most cases, absorbing additional costs that are not being reflected in selling prices. This negatively affects profit margins and jeopardises future investment and employment growth,” the FOI said.

It said that high inflation rates were worrying in the context of Malta’s plans to adopt the euro, “which is of strategic national importance”.

The federation called on the government to have a more dynamic energy policy deeply rooted in innovative ways of curbing our complete dependence on fossil fuels and on incentives to use alternative sources of energy.

The FOI also encouraged the government to show a stronger commitment to the liberalisation of the fuel and gas markets.