Standing in line at the bakery in Msida, Maria, a local pensioner, sighs as she hands over an extra €1.50 for her weekly loaf. “It’s getting harder to make ends meet,” she laments, echoing the sentiments of many Maltese as inflation rose to 2.5% in April, the highest in five years.

The Rising Tide of Inflation

The National Statistics Office (NSO) reported this week that the consumer price index (CPI) increased by 2.5% year-on-year in April, up from 1.9% in March. This marks the highest inflation rate since November 2017 and is a stark reminder of the economic headwinds we’re facing.

But what’s behind this sudden surge in inflation? Experts point to a perfect storm of factors, both global and local. The war in Ukraine has sent energy and food prices soaring, while post-pandemic supply chain disruptions and increased demand are putting further pressure on prices. Locally, increased import costs and a tight labor market are also contributing to the rise.

Feeling the Pinch: How Malta’s Cost of Living is Changing

From the bakery to the butcher, the impact of inflation is being felt across Malta’s shops and markets. The NSO reports that food and non-alcoholic beverages saw the largest increase, up 3.5% year-on-year. Meat prices were particularly hard hit, with a 7.5% increase, while bread and cereals rose by 4.2%.

But it’s not just our weekly shop that’s getting more expensive. Transport costs rose by 3.6%, reflecting higher fuel prices, while restaurant and hotel prices increased by 2.7%. Even communications services, including internet and phone plans, saw a 1.9% increase.

Government Response: Tax Cuts and Subsidies

Facing a growing chorus of complaints about the rising cost of living, the government has announced a package of measures to ease the burden on Maltese families. These include tax cuts for low and middle-income earners, subsidies for fuel and electricity, and increased funding for social welfare programs.

However, critics argue that these measures don’t go far enough and call for more targeted interventions to protect the most vulnerable. “We need to see concrete action to ensure that those on the lowest incomes aren’t left behind,” says Dr. Marthese Portelli, economist and researcher at the Foundation for the Wellbeing of Society.

Meanwhile, the Central Bank of Malta has warned that inflation could peak at around 3% later this year before beginning to ease. But with uncertainty still high, both at home and abroad, many Maltese are bracing themselves for a long, hot summer of rising prices.