The latest Retail Price Index (RPI) for April shows inflation climbing to 2.4%, confirming that price pressures are once again tightening their grip on Maltese households. While this may appear moderate in numerical terms, it comes as a fresh blow to families already dealing with stretched budgets and wages that have not kept pace with rising costs.

The reality behind this figure is sobering. Supermarket bills are edging higher, rents continue to climb, and everyday services are becoming more expensive. Though Malta has shielded its population from energy shocks by subsidising electricity, water, and fuel, this does little to offset inflation in other areas that impact people’s quality of life.

What we are witnessing is the slow erosion of purchasing power, especially among low- and middle-income earners. The existing cost-of-living adjustment (COLA) mechanism, while crucial, is limited in its ability to counteract the immediate and cumulative impact of rising prices. By the time it kicks in, many families have already felt the squeeze.

In this context, UHM Voice of the Workers has put forward a timely and pragmatic proposal: exempting the COLA increase from income tax. Such a measure would ensure that the full value of the adjustment actually reaches workers, rather than being partially clawed back by the tax system. It is a straightforward way of offering immediate, targeted relief without resorting to blanket subsidies or long delays.

This proposal deserves serious consideration. It represents a fiscally responsible and socially equitable way to bolster household resilience in the face of inflation. Exempting COLA from tax would not only support workers, but also pensioners and those on fixed incomes who are equally vulnerable to the rising cost of essentials.

Beyond this, however, lies a broader challenge. Malta must address the structural drivers of inflation—limited market competition, housing pressures, and mismatches between skills and wages in the labour market. Policymakers, employers, and unions all have a role to play in building a more balanced and inclusive economy.

Trade unions, in particular, must continue to push for fair wages, secure contracts, and sustainable career paths, especially in sectors that depend heavily on third-country nationals and face chronic staff shortages. Collective bargaining remains one of the most effective tools to ensure that rising productivity translates into better living standards.

Inflation may be creeping rather than surging—but its effects are already being felt. We must act now to protect the most vulnerable, prevent widening inequality, and preserve Malta’s social cohesion. Exempting COLA from income tax is not a silver bullet, but it is a step in the right direction.