Manufacturers feel the pinch as year-on-year cost of supplies hits new high

Manufacturing companies in Malta paid an average of 7.15 per cent more for supplies and raw materials in December 2021 when compared to the same month the previous year, a report by the National Statistics Office (NSO) has revealed.

The NSO’s Industrial Producer Price Indices report is a monthly survey of the manufacturing and energy (water and electricity) sectors. It provides a measure of upstream inflation, at the producer level, to supplement the measure of inflation faced by the household sector, as provided by the Retail Price Index (RPI) and Harmonised Index of Consumer Prices (HICP).

In other words, it measures inflation from the perspective of costs to industry or makers of products, and as a result, can be viewed as the canary in the coalmine of household inflation.

According to the report, the highest increase was registered in the intermediate goods (11.16 per cent) followed by consumer goods (5.89 per cent) and capital goods (5.59 per cent). There were no price changes in the energy sector.

When comparing month by month, the industrial producer price index increased by 1.19 per cent in December when compared to November.

Intermediate goods rose by 2.15 per cent, consumer goods by 0.89 per cent and capital goods by 0.12 per cent. Once again, prices in the energy sector remained unchanged.

The absence of any increase in the cost of energy, which is rising sharply across the rest of Europe, is due to the fact that Malta buys the liquified natural gas (LNG) it needs to run its gas-fired power station at a fixed price through a seven-year price hedging agreement that will expire at the end of March 2022.

However, there have been reports that the Government is planning to cap the prices that consumers are charged for electricity.