Every major decision, especially when it comes to policy, is one which no doubt has a list of pros and cons.  The government’s decision to enter into a scheme to introduce a stable price for 15 categories of foodstuffs is no different.

The government on Thursday 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) as from the start of February for a period of roughly nine months until Budget day in October.

The scheme is a part of the government’s efforts to combat inflation as it continues to be a major concern for the general public.  The government has already acted in similar ways when it comes to inflation: energy prices have been kept stable and fuel prices have been kept stable all through government intervention.

The difference here however is that rather than the government absorbing the cost of this measure, it will be the private sector which will be taking on a portion of the burden.

This introduces a new element to what the government has done and also an interesting clash of economic philosophies.  Beyond the ultra-pro-business mantras that the Joseph Muscat administration used to follow, this measure sees a socialist element where it is the businesses themselves who are being asked to forego a chunk of income for the greater benefit of the general public.

There will be debates over whether this is the right way or not: the Chamber of SMEs in today’s edition of The Malta Independent for example say that the burden being placed on the operators in this scheme is unfair and unjustified, but others will argue that the means justifies the end, which is that people will be protected from inflation on at least the most basic imported foodstuffs.

There is an argument also that the fixing of prices on these foodstuffs will see retailers up the prices on other products in order to make up for the loss of revenue, which might even be exacerbated in the coming months due to the ETS directive.

Economy Minister Silvio Schembri said during the announcement conference 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.

But this ‘name and shame’ would be a dangerous precedent if it is to be done by the government itself.

There is also the impact on small businesses that this scheme may have, in the sense that they may be negatively affected.  Within the context of Malta’s traditional ‘corner shop’ being pushed out of the market by big conglomerates, it certainly isn’t a healthy prospect going forward.

Either way however this is a new chapter of economic thinking by the government.  It will be interesting to see what impact it may have, and whether the end will be impactful enough to justify the means.