23 - 29 December 1999

While GDP per capita in Malta and the EU are miles apart, prices are almost the same

by David Kelleher

The advent of supermarkets in Malta has led to a reduction in prices for a wide range of items, especially foodstuffs. However, the majority of Maltese still go to the small grocery around the corner for the bulk of their shopping needs and prices there have remained relatively high.

Comparisons are odious, however, one fails to understand how certain prices in Malta are very similar to those found in the EU and so much higher than in, for example, Los Angeles.

With just two days to Christmas, The Malta Business Weekly went on a shopping outing, drawing up a list ranging from foodstuffs to CDs and computer software. And surprisingly, the total cost for 10 items available throughout Europe and in Malta, was not very different.

The shopping list included: a 2-litre bottle of Coca Cola (two 1-litre bottles in Malta), a pair of Levi's jeans, a packet of spaghetti (500gr), a carton of milk, a copy of Windows 98 second edition (full version), a Mars bar, a 1-litre bottle of whisky, a packet of 28 Pampers nappies and finally, a 2-kg chicken.

The price of these products in Malta was compared with those found in Los Angeles and six major European capitals - Madrid, Stockholm, Berlin, London, Rome and Paris.

The total cost of our shopping spree was Lm177.96 or Lm47.60 without the computer software. Malta has the highest total cost compared to the seven cities chosen, Lm11 more than the figure for London and France. Although this may give the impression that Malta is one of the most expensive countries in Europe, one must also take into account that original software in Malta is still too expensive compared to other countries.

Although, Malta has one of the lowest totals - Lm47.60 - compared to Lm61.40 in London and Lm57.37 in Stockholm, the cost is relatively high when the Gross Domestic Product per capita is taken into consideration.

Taking Berlin and Malta for example, the cost of all nine items was Lm47.60 and Lm49.27 respectively, a difference of Lm1.67 or 3.5 per cent. Looking at the GDP for both countries, the figures differ enormously. The GDP per capita in Germany is Lm8,429 (US$20,400) while in Malta it is Lm3,719 (US$9,000), a difference of Lm4,710 (US$11,400). The percentage difference between both GDP's per capita is 126 per cent.

This means that although prices compare favourably on a cost-per-item basis, the huge difference in GDP per capita shows that prices are exorbitantly high vis à vis wages in respective countries.

Spain, on the other hand, is one of the cheapest countries in Europe, with the same nine items selling for a total of Lm39.72. Not only is this nearly Lm8 cheaper than Malta but nearly Lm18 cheaper than London and Paris. The GDP per capita does however vary slightly, down to Lm6,322 (US$15,300). Lower than the EU average, but nearly double the GDP per capita for Malta, prices in Spain are cheaper. At least Malta has the lowest price for a Mars bar among the cities chosen and mothers are better off buying their nappies here than in Los Angeles or Rome. Milk is also relatively cheap compared, let's say, to Paris (48c) and Rome (46c).

The price of a Mariah Carey CD in Malta is also among the cheapest in Europe at Lm6.50 while the same CD costs Lm9.36 in London. Only in Berlin will you get a better bargain at Lm6.32.

So when you are off to the grocer next time round, remember that your counterpart in Germany, Spain or England is paying the same price but probably earning twice your monthly salary.