Addressing the realities with real solutions

Last Updated on Sunday, 23 October, 2022 at 10:32 am by Andre Camilleri

Justin Anastasi is director of We Consult You and a political opinionist

An increasing number of people are finding it extremely difficult to make ends meet and this is due to increased prices, most of which involve essential products like food. These increases are due to inflation and importation costs.

No doubt the war in Ukraine brought about the collapse of distribution of wheat into Western Europe, it being the largest producer and distributor of wheat in Europe and among the top in the world. This has caused an increase in the price of products made with wheat and, to the point Western European farmers had no other choice but to kill their farm animals due to unsustainable animal food costs. This also led to an increase in the price of other products deriving not only from wheat but also from the animals.

This, coupled with Covid, has created the perfect storm, during which governments printed and injected loads of money into the economy and there you have it, inflation. Now prices are rapidly rising but wages are not.

So was it Covid and the war that caused all this? Well in Malta, statistics have consistently shown that such increases in prices were registered months before the war started in Eastern Europe, particularly the prices of essential products such as food. Many tried to minimise the urgency of the situation, but over time it has become impossible to downplay the realities that people are facing every day.

From the increasing importation costs, which are then inevitably passed onto the Maltese consumer to the prices of property and rents, where contractors and owners are earning more for the property they build and sell.

Eurostat statistics show that within the last 12 years, between 2010 and 2022, house prices in Malta increased by almost 60% while rents increased by almost 30%. So people are already finding it hard to keep up with the price of essential products let alone having to make loan repayments. No wonder there is an increase in the number of people in Malta who are falling behind especially when paying for their home loans repayments.

Now in such a crisis the World Bank and the European Central Bank are considering increasing interest rates as a means to control inflation, thus trying to hit at the purchasing power of consumers due to a lack of supply. This is one way; however, the burden people can suffer as a result of this can be catastrophic, with loan repayments not being met, houses being re-claimed, lowering property prices and flooding the market with below current market rates will push the market down and with it other sectors.

So is it all doom and gloom? Well no, though a lot of bad decisions and circumstantial factors have lead us here, there certainly are ways out of this in a manor that doesnt cripply economic growth or the people’s pockets excessivley. We need to look at the Local Produce and how we can bolster and support it, to increase production in order to meet the demand, from subsidies to farmers on water and electricity needed to produce products locally. Tax the wealthy and those who earn significantly more than the average, those who actually consume the most; this should be a tax on short-term capital gains and dividends. Improve Supply Chains, develop new more cost-effective relations for importantion and products to Malta with a focus on volume and price. Price Control on the essentials – water and electricity, oil and gas as well as everyday food items and medicines and as a last resort Stop Spending, pay off debts, increase interest rates for those who can afford them and slow down the demand as a result.

With the Budget 2023 coming up, lets hope our government finally sees the light, supports its people, business and country through a well thought out and comprehensive speedy plan that offers a long-term vision to support our country’s future. A lot can and should be done, so let’s do it.

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