The Malta Federation of Industry (FOI) is seriously concerned that annual inflation increased to a new high level of 3.11 per cent in June.

Of most concern to local industry is the relentless increase in the Water, Electricity, Gas and Fuels Index. The latter index has increased by 41 per cent since June 2005 and by 15 per cent since the beginning of this year.

This is undermining the competitiveness of local enterprises, especially micro and small enterprises, which provide thousands of jobs. These enterprises are, in most cases, absorbing additional costs that are not being reflected in selling prices. This negatively affects profit margins and jeopardises future investment and employment growth.

High inflation rates are also worrying in the context of Malta's quest to adopt the euro, which is of strategic national importance. Government must make certain that regulators are working effectively so that reforms succeed.

The FOI strongly believes that Government must have a more dynamic energy policy deeply rooted in innovative ways of curbing our complete dependence on fossil fuels and on incentives to use alternative sources of energy. Government should have a stronger commitment to the liberalisation of the fuel and gas markets.