Leading Maltese economist warns food price cut is ‘dangerous’

Leading Maltese economist and professor Lino Briguglio has warned that the Stabbiltà government’s ongoing plan to cut prices of certain food products is “dangerous”.

Speaking at a major PN event yesterday, Briguglio compared this plan to the situation Malta found itself in in the 1970s, when ministers would use the budget speech to announce price cuts on food products.

“The strategy was to select food products that have a large weight in the price indices and individualize them, just as ministers had done in the 1970s, to give the impression that prices and price indices have fallen.”

“Meanwhile in Europe, prices have fallen significantly without direct ministerial intervention, but in Malta the minister will take credit for the falling prices.”

Prime Minister Robert Abela has already credited the Stabbiltà food reduction programme, which cuts the recommended retail price (RRP) of 15 basic food products by 15%, for starting a price war between supermarkets.

Briguglio further pointed out that the Competition Authority exists to take action against cartels and unfair pricing strategies and was specifically created to prevent politicians from interfering with prices.

“The minister (Silvio Schembri) completely ignored this law and put everyone in the same basket as if every business owner is a thief,” he said. “I think there are some thieves, but not everyone, as this intervention implied.”

“We can’t say that supermarkets voluntarily lowered prices, but I think there was political pressure. Without anything being said, there could have been secret punishments – they wouldn’t be visible, but it would sometimes happen if someone doesn’t toe the line.”