Ivan Camilleri in Brussels
Inflation in eurozone continues to swell
Inflation in the euro-area, comprising 15 EU member states including Malta, is expected to continue to escalate this month according to new estimates published yesterday by Eurostat, the EU statistical arm.
According to its monthly flash estimate, Eurostat said consumer prices in the 15 member states sharing the euro surged last month to the highest level since the eurozone was formed in 1999.
According to Eurostat, the 12-month inflation in the eurozone jumped to 3.5 per cent in March, up from 3.3 per cent in February and slightly above economists' forecasts of 3.4 per cent.
The figure, which came amid record oil prices of around 110 dollars a barrel, was well above the European Central Bank's comfort zone of just under two per cent.
Malta is also feeling the pinch particularly through the spiralling price of food on the international markets.
Last February, Malta's inflation rate reached an annual average of four per cent, a record for the past two years.
This has prompted the Commission to point a finger at the lack of competition in food importation in Malta stating in its Euro Area Quarterly report that "few food importers dominate the market and are hindering effective competition."
Malta imports almost all its food supplies.
Describing the March rate as "not a good figure", Commission spokesman for economic matters Amelia Torres said yesterday that "we have to avoid second-round effects, that is to say an inflationary spiral".
Ms Torres added that workers should keep their demands for wage increases "in line with productivity gains in order to maintain the competitiveness of the eurozone".
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A Daley
Apr 2nd 2008, 10:25
According to someone, Sterling is at the moment very low in value when compared to the Euro. Correct, and that is due to very low interest rates in UK, and which the UK had enjoyed for these last 11 years, so by this person’s own admission he is also confirming that BRITISH exports are now much cheaper! British economy is still dependent on it's manufacturing industry (or what Thatcher left of it), and that is exactly why unemployment in UK is the least in the EU. All this HIGH EMPLOYMENT in UK is notwithstanding the fact that the UK takes on the largest number of immigrants from the EU. The British are also buying more UK manufactured goods because they are cheaper then the ones in the EU - have you missed this statistic? Besides all this the contributor has the cheek to go low and forgets that if the Euro is too strong Malta will be feeling the repercussions in it's tourism which is still highly dependent on British expenditure on the Island. Other figures from this correspondent seem to be coming from the DOI in Malta where after 5 years they admitted that they had made a mistake of £m86 million in the budget deficit of 1997/8. As for the rest I have one other question for this contributor. If the interest rates in the Euro-Zone go up to say 15% because of high inflation, what would the interest rates be in Malta? Ask the people on the streets of Malta and the majority will tell you that they are not even aware that the CBM has no control on the interest rates in Malta! Taste the difference!
Alex P Galea
Apr 2nd 2008, 01:10
Quite besides the nonsensical contradiction in Mr Daley’s first sentence, his quoted CPI at 2.1% was last December. It was up at 2.2% in January, and again up at 2.5% in February. The more relevant Retail Prices Index (that is what people pay in the shops and the usual reference for wage bargaining) was at 4.1% in February. The rest of Mr Daley’s verbiage is not worthy of my comment. However, he might wish to consider that a year ago the GBP/EUR rate was 1.4790, and today it closed at 1.2677, i.e. the pound buys 14% fewer euros now. So if the infamously quoted “toilet currency” euro has got stronger, what should he be using his pounds for now?
A Daley
Apr 1st 2008, 14:37
Inflation in UK is only 2.1% and below the 2% imposed on the BOE by the British Labour Govt. for these last 9 years. Then again the UK stayed out of the Euro -Zone specifically for this reason. The UK Govt. also has full control of the interest rates and unlike Malta that has to gobble, accept and suffer higher and higher interest rates in the Euro-Zone if inflation keeps going up. Saying that inflation is happening in the Euro-Zone or wherever in the world is no solution to the repercussions on employment in Malta! Taste the difference!