The recent increase in the price of milk and other dairy products has been attributed to “further significant increases in the global market prices of the raw materials used in the production of animal balanced feed, as well as record oil prices”.
This forced Malta Dairy Products to push up the prices because it was facing an “enormous” rise in its expense when purchasing such raw materials that it uses in the production of milk and other products.
There is no doubt that what is happening on the international market affects each and every corner of the world, and Malta is no exception. This is, in fact, what globalisation means.
What is also sure is that as demands continue to exceed supply, the price of cereals and other related products will continue to rise, at least for the coming months. And with the price of oil hitting record highs almost every week, it does not look likely that the market will settle down any time soon.
The price of oil is, in fact, also directly influencing the price of cereals as the production of what is known as bio-fuel through agricultural means is leading to shortages of cereals and the end result is that they have become more expensive to buy.
In Malta, inflation is always a major issue, particularly ever since the markets were opened to competition. The Malta Labour Party has always made it one of its more favourite subjects, often accusing the Nationalist government of ignoring the problem or, at best, not dealing with it in the way it should.
The unions have also sought to protect the interests of the workers by vehemently protesting that wage increases do not compensate enough for inflation, and each time they sit down to negotiate a collective agreement or the Cost Of Living Adjustment (COLA) with the government, they aim for a tough increase.
For their part, the employers are always reluctant to hand out such increases, as this would obviously increase their costs and could, in extreme cases, also lead to workers being made redundant or even to the closure of companies. Often, these costs are passed on to the consumer – which would mean that prices go up again.
It is a vicious circle that is hard to control.
It is no secret that the unions are bringing the matter up during talks leading to the drawing up of the pre-budget document at Malta Council for Economic and Social Development level. With unions pressing for increases and employers resisting them, the government will have to, as usual, find a compromise that seeks to satisfy one and all, but which often pleases no-one.
What must be kept in mind is that little can be done locally to stop the wave of inflation that is being caused by international developments. The fact that Malta has to import most of its needs does not make things easier either.
What the government can do is to invest more heavily in alternative sources of energy – and encourage the people to do the same – and therefore limit the use of fuels to general electricity. The government has also announced that it will be investing in an information campaign to educate the people on the importance of saving energy.
The incentives that were given to encourage the people to invest in alternative sources of energy were a step in the right direction, but these have not been taken up as much as they should have. Much more can be done in this regard, and the government must be the first to give an example.