Fabian Demicoli

Double Whammy!!

 

 The latest Harmonised Index of Consumer Prices (HICP) shows Malta's inflation running at a very high 4.1 %.

It's risible how the media swallows the bait of NSO's silly emphasis that our inflation increase is among the lowest. Wow betides if it were among the highest as we would have surpassed the 5% mark, facing a crisis.

 

4.1% may be indicative of stagflation. The economy is not growing in real terms, sales are down and therefore there is no demand-pull inflation caused by too much money chasing too few things; on the property front it is also negative inflation. So the cause of inflation is cost push.

Business is suffering as entrepreneurs are biting the bullet and mitigating increased costs by sacrificing operational surpluses. It is a double whammy that can't be suffered for too long; loss of profits and increased costs.

If you had the money it is not worth keeping it as the banks pay less than the rate of inflation. Yet many are not spending. It seems that they don't have it!

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