Price watching

With reference to the letter by Ray Micallef (July 26), we wish to note that the NECC is very aware that price movements are a concern for many Maltese citizens. This is mainly the result of the experience of the previous changeovers taking place in several European countries, such as Italy and Germany. The experience of these euro area member states suggests that while the euro-effect on inflation was between 0.2-0.4 per cent, citizens experienced some price increases in day-to-day items which lead to a generally high perceived inflation level.

In order to counter these experiences, the NECC has embarked on a series of initiatives designed to mitigate any price movements as a result of the euro changeover.

Firstly: Dual display. Showing two prices for a whole year (from July 2007 till June 2008) and even longer, considering that many outlets have started in the voluntary period, may assist consumers to become more sensitive to price changes. Without mandatory dual display, customers will not have the opportunity to learn what the expected price in euro will be and consequently it will be harder for them to detect price increases. Moreover, studies show that where dual display was mandatory, the level of perceived inflation was also at the lowest levels.

Secondly: The FAIR Initiative. Through FAIR, organisations provide the consumer with a commitment that they will not be increasing prices simply because a changeover is taking place. Naturally, this commitment is legally enforceable and a total of 70 euro assistants are daily visiting a wide range of outlets to check whether these establishments are implementing what has been promised. The numbers of companies that have joined have kept increasing, and we have now more than 5,200 subscribers. Thirdly: Legal Notice 4 of 2007 specifically prohibits price increases that cannot be justified for other (non-changeover related) purposes. Effectively, this empowers the Euro Observatory (a unit set up within the Ministry of Finance) to ask a retailer to justify the reason of a price rise. Should a retailer demonstrate that this price increase has taken place for non-euro related reasons, this motivation will be accepted - otherwise the Euro Observatory will direct the establishment to revert to the original price.

Fourthly: A "Price Watch" project is being organised where a substantial number of essential products are being monitored on a monthly basis. This initiative which is run by the UHM will also involve the GRTU in those instances where unjustified price movements are noticed. Action will take place if the interventions of the GRTU are not heeded.

Finally, the latest initiative launched is that of Price Stability Agreements, whereby importers promise not to increase prices of products. Clearly, this is no easy task considering that Malta as a net importer has a high degree of imported inflation. In addition, the global commodity market experiences high price rises on raw materials. This notwithstanding, the NECC is trying to ensure that on an important number of products, the consumer can put his mind at rest that there will be no price increases. The first two agreements were signed with Island Hotels Group and VJ Salamone Marketing, and the NECC is confident that many others will follow suit in the coming weeks. A specific website is being currently prepared so that consumers will be able to access easily the products in question.