Issue link: https://maltatoday.uberflip.com/i/1506448
4 maltatoday | SUNDAY • 27 AUGUST 2023 NEWS CONTINUED FROM PAGE 1 "We have been noticing more price sensitivity among custom- ers and there is a substantial shift in spending patterns towards rel- atively unknown brands that are also of good quality," he said. The shift towards less popular brands in staple foods enables customers to save on their super- market bill, he added. It is a sentiment shared by oth- ers in the industry as consum- ers try to tap into special offers and point schemes to benefit from discounts. Checking price tags, cutting down on quanti- ties bought and skimping on the number of unnecessary trans- gressions has become the norm for many. A spokesperson for another chain of food shops was more categorical in her assessment. "We have noticed that the av- erage consumer spend has de- creased. Consumers are also be- ing prudent on what they spend their money on." She said that across all shops, the company has witnessed high- er sales of chicken products as op- posed to beef and pork. "Chicken is a cheaper form of protein than beef and pork, and this has result- ed in a shift in consumer spend- ing," the spokesperson said. However, she insisted that not everything was negative, pointing towards a decrease in the price of sunflower oil, which is an impor- tant component for the catering industry. Sunflower oil shot up in price when Russia invaded Ukraine, a major producer, as the world market experienced a sudden scarcity of the product. But the war, which has been blamed for the rapid increase in inflation on top of the supply chain problems caused by the COVID-19 pandemic, is not the only contributor. "The problem is that there is too much uncertainty and it is not only the result of the Ukraine war but also because of natural disasters that disrupt agriculture cycles and food production," the spokesperson said. "As importers we are price takers, although we do try to source products from different countries and suppliers to be able to offer consumers the best prices." Figures issued last week by Eu- rostat, the EU's statistical agency, show that Malta's annual inflation measured by the Harmonised In- dex of Consumer Prices (HICP) stood at 5.6% in July. The result put Malta in mid-ta- ble among Eurozone countries, slightly above the euro area aver- age of 5.3%. HICP is a common European standard that allows direct comparison of inflation between EU member states. However, the comparison with other euro area countries can be misleading since the Maltese government continues to cush- ion consumers from fuel and energy price increases through generous subsidies. A different set of inflation sta- tistics issued by the National Statistics Office last week give a clearer picture of why Maltese consumers are still feeling the pinch despite stability in the pric- es of fuel and energy. The Retail Price Index (RPI) is a domestic measurement used as a benchmark to calculate the cost of living wage increase, among other things. According to the RPI, prices in July increased by 4.7%, down from 5.4% in June. This was the lowest annual rate since March last year. But the index showed that the highest annual inflation rates were registered in housing (+8.9%) and food (+8.8%). On the flipside, the lowest annual infla- tion rate was registered in cloth- ing and footwear (-2.2%) and wa- ter, electricity, gas and fuels that saw no increase as a result of sub- sidised price stability. Food remains on a persistent upward trajectory and is now hit- ting pockets hard. In its outlook on the economy published last week, the Central Bank of Malta said price pres- sures will remain "highly persis- tent" with inflation expected to remain elevated during most of the forecast horizon. And confirming the impact price increases have had on disposable income, the CBM is forecasting that in the short term, inflation "is likely to lead to slower growth in private con- sumption". The Bank also said the high inflation will cause pressure for wages to rise, adversely impact- ing businesses' profitability in the medium term. Shift towards cheaper brands Euro area annual inflation, July 2023 (Source: Eurostat, HICP index)