Inflation fears persist as retailers resist euro guidelines

Disagreement between the Chamber of Small and Medium Enterprises - GRTU, and the National Euro Changeover Committee has resurfaced, with the GRTU instructing shop owners not to stick to NECC guidelines on dual pricing.

According to the NECC, retailers who choose to display prices in both the lira and the euro currencies in the first six months of next year must do so using the central parity rate of €1:Lm0.4293 and make it clear that customers paying in euros may be charged extra because of administrative or bank charges.

But the GRTU recently told its members to ignore the NECC guidelines and include bank and administrative charges in the price before converting it into euros.

According to the NECC, however, the GRTU's suggestion would inflate prices and compromise the information and educational purposes of displaying prices in both currencies. The NECC has repeatedly stated that the Maltese lira will still be the currency in circulation both during the optional (January to June 2007) and mandatory (July to December 2007) dual display periods, adding that banks would lift charges during the mandatory period.

GRTU director general Vince Farrugia told The Times retailers were irked by repeated innuendos in the NECC's statements that constantly drove home the message that retailers would use the changeover process to push up prices.

"The statements by the NECC are incendiary and are instigating consumers against retailers. The statements themselves are feeding inflation," Mr Farrugia said.

The GRTU withdrew from the NECC earlier this year claiming it was being used as a front by the government to take unilateral decisions in the run-up to the adoption of the euro instead of being consultative.

"Dual display of prices is happening more rapidly than the government intended. We expect (Parliamentary Secretary within the Finance Ministry) Tonio Fenech to sit down with us and negotiate a package. Retailers will be prepared to change cash registers and comply if they are compensated, say, with a tax credit," Mr Farrugia said.

Despite the GRTU's protestations, however, there does seem to be a widespread perception that retailers may use the changeover process to inflate prices.

According to a NECC spokesman, "successive surveys have shown that an overwhelming majority of the population believes retailers will 'abuse and cheat' in their pricing during the changeover.

"No one can decide to discard this reality and the NECC, which is made up of representatives of all sectors, including the private sector, is taking steps to ensure that consumers have confidence in the currency changeover, while retailers are given the opportunity to prove themselves as trustworthy and reliable in their relationship with the clients," the spokesman said.

The NECC reiterated that bank charges will not be an issue during the mandatory dual pricing period as banks have committed themselves to lifting all currency charges on euro cash deposits as from next July.

"It is a confidence building mechanism that is increasingly gaining the approval of consumers and retailers alike," said the NECC spokesman, adding that research showed that dual display of prices was the best tool both for the consumer and the retailer to achieve a smooth changeover and curb abuses.

Rebutting the GRTU's claims about lack of consultation, the NECC said the GRTU had decided of its own free will to abandon the consultation forum, even if it still had the chance to form part of the euro planning process if it so wished.