Government should investigate instances of abusive practices due to profiteering, says MEA director

The government should aim to investigate instances of abusive practices due to profiteering or cartel behaviour, the director of the Malta Employers Association (MEA) Joe Farrugia told The Malta Independent on Sunday.

Prime Minister Robert Abela recently addressed the growing concern of overpricing among citizens and businesses in Malta during a televised appearance.

Consumers have been complaining that prices are rising in all areas of life due mainly to disruptions brought about by Covid and the war in Ukraine.

In response to a question posed by a concerned constituent during the event, Abela said that “prices have gone down to near pre-war levels. But if you were to ask me whether this reduction is reflected in local prices, this isn’t necessarily the case.”

Farrugia was asked, among other things, whether he believes prices will go down in the near future and whether the reduction in logistical costs would mean a reduction in local prices.

He said that “the trend in international logistics prices may bring inflation down, but this does not necessarily imply a fall in prices”. If inflation were to fall from 7% to 5%, prices will still be going up, but not at the same rate, he explained.

Farrugia said that another factor to consider is that the inflationary spike experienced during 2022 is not exclusively the result of the cost of logistics, but also caused by other factors, such as the invasion of Ukraine by Russia and the resulting increase in food prices which were felt across many supply chains.

This, he said, has also instigated an upward pressure on labour costs in many countries, including Malta “which will dampen pressures to bring prices down”.

Farrugia went on to mention that what can be expected to happen in the coming months, “given that logistic prices stabilise, is that, unlike 2022, there will be more price stability”.

Local prices, he said, will also depend on demand factors, and the responsiveness of demand for different products will depend on the nature of the product. “Therefore what one should expect is a lower rate of inflation and a wage price adjustment.”

Farrugia also said that government policies should aim at shielding vulnerable groups, such as pensioners, from experiencing undue hardships and “investigate instances of abusive practices due to profiteering or cartel behaviour, especially for essential products”.

The last Budget, Farrugia said, contained some measures to this effect, through the COLA mechanism and other supplements given to the most vulnerable.