Editorial

One issue that is troubling all social partners in this particularly challenging economic climate is that relating to above-normal inflation, especially when compared to that of other eurozone countries. Not all pressures on rising prices are the result of imported inflation.

The Governor of the Central Bank used very diplomatic language when he attributed higher prices to what he termed “market imperfections”. What this really means is that, in a small market, the dynamics of competition do not always work as well as they should.

Some of the providers of certain goods and services in Malta enjoy monopolistic or quasi-monopolistic conditions that, in practice, give them the power to dictate their prices. Some of these providers operate in the private sector. They have such a dominant position that even those who believe that market forces should be left to determine prices are beginning to show doubt about the validity of such a principle in the local context.

Of particular concern are the exorbitant prices charged for certain items of food and medicines. The critical importance of these goods makes it the more urgent to find ways and means of controlling the phenomenon of unreasonable price rises.

The solutions must not be sought in tools that may have served us well in the past but are today obsolete. No political party, for instance, is promoting the reintroduction of price controls enforced through some government agency. Neither is the importation of goods by the government a feasible option. So what can be done in practice?

One possible partial solution could be the setting up of an efficient and effective consumer protection agency to advise people on how to get the good prices by selecting the suppliers that offer the best terms. The ease of communication makes this option an effective one. Similarly, such an agency should name and shame suppliers offering a poor service to their clients, even if by charging exorbitant prices .

Another option to curb price abuse could be found if bureaucracy in the importation of goods is reduced. While one can understand the need for Customs to make random checks on packages containing imported goods by individuals, such a process should not be managed in a way that discourages people from importing goods via the internet.

With regard to fresh food, we have to look at ways of cutting the delivery costs from the supplier to the ultimate consumer to a minimum. The vegetable market system is a prime candidate for reform. It is a fact that while local farmers are paid very low prices for their products, the housewife has to pay a multiple of these prices to procure the same products. Someone in the middle of the delivery chain must be making a very unfair profit to the detriment of both the farmers and the consumers.

Ultimately, the most effective tool to control price abuse will always be consumer education. The prevailing difficult economic situation has instilled a sense of frugality in most consumers who have learned to shop around to get the best value for their money.

If branded goods offer less value than unbranded ones, then people should be encouraged to switch their buying preferences. This is especially relevant in the purchase of medicine when a generic drug can be as effective as the more expensive branded variety.

Market imperfections can, and must, be neutralised for the benefit of the ­consumer.