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MALTATODAY 19 September 2021

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4 maltatoday | SUNDAY • 19 SEPTEMBER 2021 NEWS PRELIMINARY MARKET CONSULTATION The Ministry for Tourism and Consumer Protection hereby notifies interested parties that it is issuing a PRELIMINARY MARKET CONSULTATION (PMC) for the provision of services to design and develop a Cost Benefit Analysis addressing digital investment in the Tourism Sector across the Maltese Islands (Ref: MTCP 01/21). The PMC document can be downloaded from etenders.gov.mt. Response to the PMC is to be submitted through etenders.gov.mt by not later than Monday, 4th October 2021 at 10 am (GMT+2). For any queries you can send an email on digitaltourism@gov.mt MINISTRY FOR TOURISM AND CONSUMER PROTECTION JAMES DEBONO AN inflation index for low-in- come households separate from Malta's retail price index is needed to see how social bene- fits should be increased over and above the annual Cost of Living Adjustment (COLA). The proposal was made by the Central Bank's senior econ- omist Jude Darmanin, who says the separate index can en- sure that purchasing power of low-income households can be maintained while making such social grants more "transparent and effective." The index would be based on a more detailed "micro-lev- el study" on the prices of the specific products purchased by low-income households, as well as their spending shares from the Household Budgetary Survey (HBS), to finally calcu- late a low-income household (LIH) rate. The author warns that even the HBS may not be the most realistic way to assess how in- flation is impacting on low-in- come families. This is because the sample population sur- veyed by the HBS is taken from the latest Census held in 2011, well before the population of Malta grew rapidly due to mi- grant inflows, "which may have significantly altered the house- hold distribution away from that used in the HBS". Moreover the HBS, which is conducted every five years, is limited in its ability to capture changes in consumption pat- terns over time. A case in point was the change in consump- tion during 2020 caused by the COVID-19 pandemic. Inflation has a sharply dif- ferent impact on low-income groups, who are more likely to spend a greater proportion of their income on food. But it turns out the gap be- tween the two rates of inflation decreased after 2013 due to the "sharp drop and subsequent stabilisation of energy prices". Indeed the inflation rate faced by households in the bottom income quartile was only sig- nificantly higher than for the general population, during pe- riods when food inflation was high, such as in the first half of 2010, and in 2013 when the difference peaked at over 1 per- centage point during these two periods. That's because low income groups spend 31% of their income on food, while the general population spends 23% of income on food. Between 2016 and 2019, in- flation for low-income house- Low-income earners should get separate inflation index Inf lation hits low-income groups harder, but hand-outs and COLA ensures the value of minimum wage and pensions has improved since 2010 The Household Budgetary Survey may not be the most realistic way to assess how inflation is impacting on low-income families. This is because the sample population surveyed by the HBS is taken from the latest Census held in 2011, well before the population of Malta grew rapidly due to migrant inflows, "which may have significantly altered the household distribution away from that used in the HBS".

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