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Unions concerned about out-dated household budgetary survey

Current inflation appears incompatible with the strong economic performance

yannick_pace
Yannick Pace
20 September 2016, 8:09am
Finance minister Edward Scicluna said that it was unclear whether inflation will go up or down once the index is updated
Finance minister Edward Scicluna said that it was unclear whether inflation will go up or down once the index is updated
A number of trade unions have expressed their frustration at the government not yet having released the results of the Household Budgetary Survey (HBS). 

When asked about whether or not they felt that the wealth gap was increasing and if they will be putting forward any proposals for increasing the minimum wage in the upcoming budget, many said that they had found it difficult to formulate certain proposals since they did not have the results of the HBS in hand. 

“With the survey already being three years old, not only is it necessary to publish the results but also to carry out a new survey that is more representative of the current state of affairs,” said John Bencini, chairman of the Malta Council for Social and Economic Development.

The survey is conducted among private households with the aim of illustrating patterns in household expenditure and how these are distributed among different goods and services. The results are important because they are used to calculate the Consumer Price Index and ultimately the cost of living.

Moreover, the results establish differences between income and expenditure across different segments of society giving an indication of whether or not spending is exceeding income.

Dr Philip von Brockdorff, who is Head of the Economics Department at the University of Malta, explained how basing the cost of living adjustment (COLA) on an out-dated consumption pattern could result in an underestimation of the inflation rate.  

And an out-of-date inflation rate can affect outcomes from collective bargaining, since unions normally include COLA as part of any increase in negotiated settlements. 

The results of the HBS also have some effect on the rate of inflation, which despite Malta’s strong economic growth has remained relatively low. 

“The current inflation rate appears incompatible with the strong economic performance, which under normal circumstances, would fuel inflation,” said von Brockdorff. He added however that this does not necessarily mean that the current estimation of inflation is incorrect. 

Earlier this week Union Haddiema Maghqudin said that the low rate of inflation is due to the fact that the out-dated figures are being used to calculate the Consumer Price Index.

The UHM added that the government was purposely dragging its feet in publishing the results in order to keep inflation values low. 

Finance minister Edward Scicluna on his part said this was not the case and that it was even unclear whether inflation will go up or down once the index is updated with the results of the latest survey. 

“It is not going to be so significant that it will change things too much, however, if anything it’s theoretically biased towards going down because the new index will introduce new goods which didn’t exist before, and these new goods are likely to have a lower cost,” said Scicluna.

He acknowledged however that it has taken too long for the results to be published adding that he does not know why they have taken this long, but he has demanded that preliminary results be available by December. 

yannick_pace
Yannick joined MaltaToday as a journalist in 2016. His main areas of interest are politics...