Editorial

As red light begins to flash over Malta's plan to join the eurozone in 2008, the government is toying with the idea of re-introducing price orders. According to the latest figures, inflation is rising at a rate that may well breach the European Union's inflation benchmark by the time the Commission decides the island's preparedness to join the eurozone in May next year. Malta's 12-month inflation average, as of last March, stood at 2.6 per cent, when the current ceiling is 2.65 per cent.

When Malta joined the EU, many thought the move would open the way for lower prices. With the liberalisation of the market, some products that had been produced locally were practically edged out of the market as imports of similar products at much lower prices filled up shelves at supermarkets. Now that the first phase of price adjustments of certain commodities is over, the consumer is finding out that the situation has not developed quite to expectations.

When Prime Minister Lawrence Gonzi was presented with the euro master plan by the National Euro Changeover Committee some time ago, he appeared as if he was responding to the growing national concern over rising prices when he said that his government would clamp down on any form of cartel that pushed up prices.

Quite logically, he argued that the liberalisation of certain imports should have driven prices down, not up. He did not go into what the government had in mind to tackle the issue, but the Parliamentary Secretary at his Finance Ministry, Tonio Fenech, has now spelled it out. He has warned that if prices, particularly of imported foodstuffs and medicine, keep failing to reflect market trends, the government would have no option but to intervene, possibly even by re-introducing price orders.

It stands to reason that the parliamentary secretary must have done his homework well before coming out with such a warning. But why has he brought up the possibility of re-introducing price orders when abuses can be checked by the Office of Fair Competition, as the government is being told by the retailers' association and by others? Is the OFC in fact operating as it should or is it not? Is it wise to take Malta back to past times when so much effort has been made to reach this stage of market liberalisation?

Mr Fenech has been reported saying that the government had already discussed the issue with the Chamber of Commerce because according to its analysis, certain prices of imported products were being fixed by various cartels operating in the local market. If this is so, steps ought to be taken immediately to investigate the causes for such cartels and stop the abuse where it exists. The consumer is also entitled to be advised of the products for which s/he is being made to pay more than s/he should.

Why does it always have to take so long for action to be taken on matters that are known to be of general concern? As far back as July last year, the government was already speaking in terms of the need of addressing "domestic structural-market rigidities, not least because of the risk that they could potentially act as an additional drag to Malta's export performance". Well, the red light over the plans for the island to join the eurozone, switched on by the rising inflation rate, does not leave much room for vacillation.

The consumer, bearing the brunt of so many setbacks, deserves much greater protection than s/he is being given today.