The government on Thursday has launched a price-stability assurance scheme, which will see the price of 15 categories of imported basic food items reduce by a minimum of 15% below the Recommended Retail Price (RRP) on the RRP as on 31 October 2023, in an agreement reached with importers and retailers of food products.

Economy Minister Silvio Schembri gave details to the media on the agreement reached with importers and retailers, after discussions on the matter started at the end of October of last year.

The scheme, which will start on 1 February to give a period of adjustment for retailers, will run for over nine months until the Budget Day for 2025. 

15 categories of staple foods which are most commonly consumed by Maltese population, and the ones which have increased the most in price, are included in the scheme, reaching up to approximately 400 products. 

The scheme applies to multiple brands which fall under the listed categories, and not just one brand.

Schembri said that there are currently over 200 outlets participating in this initiative, and government is also strongly encouraging importers and retailers who aren’t participating to join the initiative and apply. 

He added that this is “not a price-fixing exercise, but one in creating price stability on the most essential foodstuffs to mitigate against the impact of inflation on families,” describing it more as ‘price capping’

He also said that discussions were done among the major importers and retailers in the country, whilst smaller retailers have all been sent a letter in the mail two days ago, explaining the process of applying for the initiative.

Schembri said that a fixed grant of €125 under certain terms and conditions will be given to smaller retailers as compensation for each month of their participation in the scheme, given to businesses not exceeding €800,000 in sales in the year 2022.

He said that according to the Eurostat, it is being forecasted that the inflation on food prices at a European level, which is currently 6.3% today, will decrease to 2.4% by the end of the year.

Schembri said that the reason why the scheme will run until Budget day is for government to then reconsider and see if further intervention is needed.  If a rate of 2.4% inflation is reached, then it would be considered a “normal” rate, and the scheme would no longer be needed, Schembri explained.

He said that importers give supermarkets a recommended retail price, and supermarkets or shops can choose to sell at the recommended price or else go lower than that by reducing profits 

While the RRP does not equate to the price at the till, it represents the maximum price that can be charged for an item. He added that the closer to the RRP a retailer charges, the more of a reduction they will be forced to make. 

“For example, many small convenience stores will probably reduce the entire 15%, but larger supermarkets could afford to reduce even more than 15%,” Schembri said.

The Minister said that prices would be monitored and retailers who deviate from the agreement, or else shops who resort to raising prices of other items to compensate for the reductions in basic foods, would be named and shamed, even by consumers on social media.

Prime Minister Robert Abela, addressing a press conference on the scheme, said that the reduced-priced products will not return to a higher price after the Budget, and encouraged representatives of importers and retailers to invest in their clients to be able to enjoy the fruit of the investment in the long-run.

The tri-partied agreement between government, importers and retailers also reflects a shared responsibility, as importers and sellers have willing accepted a portion of the burden to absorb inflation during this period, Schembri said, to contribute positively to the community.

Schembri clarified that the price at which a consumer buys from a shop may not necessarily be the RRP, as the store or supermarket then decides if it will stick to that price or lower the price to be more competitive. 

The categories of food in the agreement includes: 

- Corned beef, (full fat, light and reduced salt, in all sizes); 

- Cornflakes in packets or bags, cream crackers in all sizes; 

- Fresh and frozen minced/ground beef and/or minced/ground pork and/or a combination of both in packets; 

- Packed fresh and frozen pork chops;

- Frozen raw chicken legs, both packed and in loose form/by weight, and fresh packed

- Frozen raw whole chicken, both packed and in loose form/by weight, and fresh packed

- Frozen peas, broccoli and spinach in bags of all sizes (excluding organic)

- Imported Black tea bags of all sizes

- Skipjack tuna in vegetable, soya or sunflower oil in tins of 70g to 200g (excluding skipjack and yellowfin tuna in brine and in olive oil)

- Standard cut frozen friable French fries in bags of all sizes

- UHT milk: Skimmed, Semi-Skimmed, and whole in cartons or bottles of all sizes

- Wheat spaghetti and penne in packets of all sizes

The full list of included products and which brands, the locality of each shop participating in the scheme, as well as the price in a snapshot as it was before 31 October 2023, and the now price reduction of a maximum of 15% will all be listed online on ekonomija.gov.mt, through which small retailers can also apply to participate. A total of 28 major importers and retailers signed the agreement.

Participating outlets’ shopwindows and products will be clearly labelled, with the logo Stabbilta. 

Addressing representatives of importers and retailers at the conference, Abela said that his government wanted to give people and businesses stability and peace of mind, at a time of uncertainty.

Abela thanked importers and retailers for being “genuine interlocutors,” remarking that the journey to reach this agreement was not easy, but the agreement would improve the purchasing power of families, benefiting importers and supermarket owners through their investment.