Business | Markets
Prices of essential commodities in Abu Dhabi may fall further
Prices of essential commodities in Abu Dhabi may decline further in the weeks ahead if the oil prices on the international market continue to weaken, or stabilise at a lower level, economists told Gulf News on Monday.
- By Himendra Mohan Kumar Staff Reporter
- Published: 23:36 December 22, 2008
Abu Dhabi: Prices of essential commodities in Abu Dhabi may decline further in the weeks ahead if the oil prices on the international market continue to weaken, or stabilise at a lower level, economists told Gulf News on Monday.
Prices of 44 per cent of essential commodities, including flour, fish and seafood declined in Abu Dhabi this month, according to the latest findings by Abu Dhabi's Department of Planning and Economy.
The latest Abu Dhabi price index revealed that about 12 per cent of commodities retained their prices.
"Commodity prices are falling because of lower cost of production due to declining oil prices - a major component of the cost of production," said Mohammad Amerah, an Abu Dhabi-based economist.
"As well, a slowing demand is accompanying the cost of production," he added.
Amerah said a third factor for lower prices of essential commodities could be lower margins of profit being charged by retailers in order to maintain their volume of sales.
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Dalton Garis, another Abu Dhabi-based econ-omist said that it takes energy to make food and because energy does not cost as much any more, so food is not costing as much.
"About 40 per cent of the cost of food is energy," said Garis.
Global oil prices have crashed more than $100 (Dh367) a barrel since July amid fears of a painfully long global recession and falling oil demand.
Oil prices have gone into a freefall, led by the turmoil on US financial markets and the subprime mortgage crisis that have together wiped out trillions of dollars from the world's financial system.
Your comments
Though a drop in essential commodities is good, the largest chunk of our income goes towards rent and landlords are in no mood to stop the five per cent increase. With renewals around the corner, landlords have already started sending notices for the increase.
Mustafa Huneyd
Abu Dhabi,UAE
Posted: December 23, 2008, 14:36
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