Cost of living

[jimd]

Rumour in the UK says that the coct of living in Malta since the change to the euro has risen by as much as 10%, please tell me this is not true.

[Mr Kriss]

I have no exact figures to hand but very much doubt it.

Food prices are slightly higher, as everywhere, but I have not seen any evidence of other prices rising.

Of course, the pound has fallen in value relative to the Lire/Euro, so anyone looking at costs in GBP may assume price rises but I think rumours may greatly exagerate.

[gozomark]

that was in the travel section of The Sunday Times in the UK, and is just lazy journalism - the Central Bank estimates the impact of joining the Euro was 0.2-0.3% in Q108. Actual inflation (HICP) was month-on-month -0.4% in Jan, +0.4% in Feb - ie prices were the same in Feb as they were in December

article
http://travel.timesonline.co.uk/tol/lif ... 681221.ece

"One destination to avoid is Malta. Prices rose by about 10% with its changeover to the euro, so, combined with the fall in sterling, Malta has effectively become 17% more expensive in the space of four months. "

note the phrase "with its changeover", ie at the same time as, not "because of" ie caused by. Basically the same could be written about going from the UK to any country using the Euro - what the article should have said was "One destination to avoid is Europe"

http://www.independent.com.mt/news.asp?newsitemid=67440

so if you are coming to Malta now, its about 17% more expensive in UK£ than last Summer, but only about 3% more expensive in Euros

[gozomark]

the Euro has many flaws from an economic stand point (how can one interest rate be suitable for all countries using the Euro when it isn't really one economic market - its not the same as the US). However one flaw it doesn't have is that it leads to higher prices - on average joining the Euro leads to a short term 0.2-0.3% increase in inflation, but, especially for a small trading nation like Malta, the savings in reduction of foreign exchange transaction costs more than makes up for this in the medium term.

I'm sure many of us have seen articles about Italy saying prices rose 10% - they didn't - the price of things like Cappucino and newspapers did, and thats what people saw, but expenditure on items like that is miniscule. In fact, prices in Italy rose 0.3%.

[jimd]

Thanks Mr Kriss and Gozomark not as bad as I was led to believe, we will still be making our annual pilgrimage but will stay longer as we have retired. We will be looking around with a view to renting an apartment for maybe 6 months October through to March.

[gozomark]

where are you thinking of renting ?

[jimd]

Qwara, Bugibba or St Pauls bay area

[doc]

So reading the threads on this forum about cost of living, the general view seems to be that malta is cheaper than the uk.

However I looked at the xxxx supermarket site and I registered a dummy user, and here it is for anyone else's convenience (mailinator.com is a neat site for creating disposable email addresses):

edit : large Malta supermarket

compare with tesco.com in the UK
http://www.tesco.com
user: joe@mailinator.com
password: tesco123

(this is based on dec 2008 GBPEUR exchange of 1.05)

so its hard to compare stuff because it depends on quality and brand etc but picking on cheapest basics to take out quality and brand difficulties:


milk 72c/litre vs GBP 1.53 for 4pints (2.27 litre) - malta 1% more expensive.


tesco value butter 250g 84p vs clover 250g 91c - malta 3% more expensive.

mayor baked beans 435g 54c vs tesco value baked beans 420g 29p - malta 69% more expensive.

tesco value 800g wholemeal bread 45p vs jespers 500g 85c -malta 190% more expensive. Or smart whole meal loaf (unspecified weight) 68c - if give benefit of doubt - same weight (doubtful) still malta 31% more expensive.

fontana bottled water 2L 40c vs tesco value 2L 14p - malta 170% more expensive

St Ivel mild cheddar cheese 400g €3.78 vs Tesco English Mild Cheddar 500g £3.24 (ignoring temporary price reduction) - malta 39% more expensive.

etc etc

Any comments suggestions taken! Are UK supermarkets doing more lost leaders on basic stuff? Is xxxx not the cheapest place to shop?

Cheers

-Doc

[gozomark]

Hi Doc , and welcome to the forum

when this thread started the exchange rate was around 1.30 Malta certainly isn't as cheap v the UK as it used to be even 6 months ago, and is probably now comparable for a typical grocery basket. xxxx is a little more expensive than average, but not alot

You are comparing in several cases budget brands with high quality Maltese brands eg baked beans - the Mayor brand is an excellent brand. Butter - what is the price of Clover butter in the UK, for comparison ?

certainly one thing Malta misses is the budget supermarket brands

ps I've edited out the mention of the particular supermarket and their website as it could be seen as free advertising for them - there is a discussion of the pros and cons of different supermarkets, including pricing, on the "recommended suppliers" forum

[gozomark]

where Malta still scores massively over the UK in cost of living is in

1. renting
2. labour intensive things - like car repair and building work
3. tax
4. no council tax

I'd say 5 years ago, the amount of pretax income you needed to live in Malta was 50% of that in the UK. With the exchange rate at 1.05 thats now maybe 75%. There is alot of moaning by Brit expats (including me) of how much more expensive it is to live here than a couple of years ago for those with £ income, but its still alot cheaper than the UK

[dave dee]

+ general repairs, i.e. fuji digi camera, shutter and power switch replaced cost, 25 euro. sky hd box, took one week to repair, cost, bring me 10 euro back if it still works after a month. main fuse in house fusebox after major lightening strike cost 45 euro. fitted, i think i remember paying more for someone to look at things in u/k.

[gozomark]

PC fixed last week - several hours work, and ended up changing alot of the connecting cabling inside - cost € 20

[doc]

So I guess another attempt at fair comparisons (to take out potential for "lost-leader" practice in the UK) would be to find prices for items which are literally the same brand. (Though that has limits as I would have thought local produce should be cheaper.)

heinz beans 200g (stupidly small tin, but the larger pack has unspecified quantity on smart) 58c vs 48p - malta 15% more expensive.

marmite 250g €3.41 vs £2.48 - malta 31% more expensive.

(Just saw gozomark 1st response: clover butter 500g € 1.77 vs £1.56 - malta 8% more expensive).

Personally I go for value for money and am not a stickler for brands mostly. So that means I would buy local produce or generics in preference. Its a bit tricky to fully evaluate that.


Not trying to talk down Malta - just trying to approach it scientifically and looking for ammunition to convince the wife of the economics of each financial component of planned move in 2009.

About gozomark second post:

Yes the exchange rate has moved a lot recently, and I rebalanced some investments out of USD and GBP into EUR partly in anticipation of moving to malta in 2009, did the forex transfer about 6 weeks or so ago and since then the euros have increased in value relative to the GBP by 15% - so to me that makes clover cheaper in malta - sort of


I definitely do appreciate the tax advantages.

About rent I saw also claimed that the rental return is 2.5% - 3.5% and I believe it is more like 5 or 6% in the UK, making rents cheaper in malta. ie you could rent a house of approx twice the purchase value for the same rental cost in Malta vs UK.


About labour intensive things by feeling on this is mixed - meaning I am not sure I directly consume many labour intensive things.

I do get the car fixed by a local garage and they charge £20/hour - but the mechanic is excellent, trustworthy, reliable and doesnt try to cheat you on anything eg he did a major job in 1/2 the manufacturer quoted workshop hours. In comparison the main car manufacturer approved dealers are £45 and £60/hour (plus vat! at 15% now I guess). I saw some post on this site saying car repair is cheaper in Malta - but for comparison to £20/hour you would need to have the "excellent, trustworthy, reliable and doesnt try to cheat you on anything" and reliable meaning gets done when they say it will get done also (modulo genuine unforseen issues).


I have 4 school age children and the private school cost in Malta that I found fees listed for so far is a fraction of UK and presumably that it is mostly labour cost Thats a big plus.


The other thing and I'll put this in the other forum is the ~100% car registration tax in malta - so have been trying to read up on if/when this is due to be improved.

Thanks for the speedy comments.

btw another way to compare is the PPP statistics (Purchasing Power Statistics) according to my calculations from 2007 PPP figures malta was then 50% cheaper than the UK. PPP is based on a basket of 150 - 200 products adjusted for quantity consumed in the country. Meaning eg if people eat more say bread and less meat in one country than the other that would be somehow included. So to benefit from that 50% PPP it means you have to consume goods in the same proportion as the average resident of the country. PPP covers everything - housing, food, clothes, cars etc.

But since 2007 the GBPEUR has move from around 1.40 to 1.05 (exactly 33% reduction in strength of GBP vs EUR) making Malta now perhaps just 12.5% cheaper. But there are other variables - I didnt find 2008 PPP figures not released yet and it depends on perhaps change of spending habits in both countries due to economic downturn, relative rate of inflation etc.

If you look at the third graph on

http://fx.sauder.ubc.ca/PPP.html

which shows currency natural exchange rate vs current exchange rate based on PPP - you can see that GBP could be considered 20% undervalued at present. Meaning longer term perhaps you would expect things to return more to GBPEUR of 1.25 range.

-Doc

[gozomark]

car mechanic - the guy I use in Gozo is excellent, and I trust him 100% - he charges about £4-5 an hour

[gozomark]

a long term equilibrium of around 1.30 feels right to me (which after all is where it was only a couple of months ago). Never mind Malta, but talking to people in Germany and France, the UK is far cheaper than in those now, whereas at 1.50 is was more expensive

on groceries - if you try and buy the exact same things as you did in the UK they will be more expensive, but you almost certainly won't. Bread for example - yes wholemeal is expensive here, but the local traditional bread is much cheaper and tastier. Cheese - imported cheese from the UK is more expensive than in the UK, but we eat fresh Gozo cheese. Something like marmite is bound to be more expensive than the UK as its made in the UK, so if you continue to buy mainly UK produced goods, yes Malta will be more costly, but there are + and -

Local chicken and pork is excellent qualitywise, and yet the same price as the lowest quality in the UK.

cigarettes wine and beer are atleast 1/3rd cheaper