The cost of traditional Maltese bread is to increase on Monday, the price for a large loaf will increase from €0.47c to €0.54c, a small loaf will rise from €0.30c to €0.34c.

Finance Minister, Tonio Fenech, said that the government had reached an agreement with the Bakers Co-operative to liberalize the bread market as from the 1st of January 2009. The Minister said that all subsidies, with the exception of the subsidy on gas, would cease at the end of the year.

In the meantime, he said, the government is going to help bakers compete in a free market, bakers who operate with diesel or light heating oil will be granted a maximum of €5,000 to restructure their bakery and convert to gas.

On a social level, Government will be assessing the impact of the agreed increase on lower income families to ensure adequate compensation. Moreover Minister Fenech added that Government had already been proactive during the previous budget and thus allocated an extra EUR 2.33 over and above the cost of living wage increase, on top of other measures intended to support the lower-income families.

The Bakers Co-operative President, Karmenu Micallef, said he expected consumer demand for Maltese bread to decrease, leading to a drop in bakers income, the consequence would be a reduction of workers or even the closing down of certain bakeries.