Opposition Leader Charles Mangion and Finance Minister Tonio Fenech had a go at each other over inflation this past week. It is not the first time that this has happened; neither will it be the last.
It is all a question of figures, and the two gentlemen have brought forward arguments in favour or against official figures showing that the cost of living is on the increase, that Malta is experiencing a higher than average rate of inflation and that wages in Malta have not risen enough to compensate for the increase in costs.
A layman reading through the statements and counter-statements will, really and truly, understand little of what is going on. The statements are full of figures, percentages and comparisons that do little to explain the real situation, what is actually happening in real life. It is only when he looks at what money is left at the end of the month that he makes up his mind as to who is nearer to the truth.
Statistics are published to be interpreted, and they can be seen from so many angles that even the most negative results can have their own silver lining. Conversely, even the most positive ones can be seen in bad light.
And so we had Dr Mangion and Mr Fenech explaining things as they see them – that is, negative for the Opposition Leader, who is also the party spokesman on financial matters, and positive for Mr Fenech.
Of course, Labour supporters will believe what Dr Mangion is saying about inflation, while Nationalist diehards will take Mr Fenech’s side. But, at the end of the day, is either of them giving a true picture of what is happening out there?
Mr Fenech’s line of defence – and that of the government – is that inflation is being imported through the rise in the price of fuel and cereals. Dr Mangion does not contest that this has had an impact, but he is also of the opinion that other matters have affected prices.
When the two speak about inflation in other countries, they conveniently leave out important elements in their comparisons. Mr Fenech says that inflation in Baltic states and former Eastern European countries is higher than that in Malta, omitting that wage increases in these same countries were higher than the inflationary rate. This latter argument was highlighted by Dr Mangion, who however did not point out that wages in these countries are still lower than those in Malta.
The cost of producing a product or giving a service has gone up, and this is inevitably passed on to the consumer, who feels that the increase in his wages is not enough to compensate. The problem is that any increase in wages will eventually “turn against” the consumer too when prices go up again to make up for that wage increase. It is a vicious circle that is impossible to control.
The thing is, yes, prices are on the increase, but this is nothing new as prices have always gone up. Competition only helps to give consumer a wider choice, but generally speaking prices will inevitably continue to rise.
The question that needs to be asked is this – are prices going up at a higher rate than they used to in the past, or are they doing so at a normal pace? Is it only a perception or is it real that every week the cost of necessary items is going up? Are people really buying the same things at a more expensive rate or are they buying more things than they really need and then blame the higher cost on inflation?
Are we living beyond our means and then blame it all on inflation?