Opinion | Editorials
No choice but to control prices
Government is right to intervene to protect those who are most affected by inflation.
- Gulf News
- Published: 00:48 March 13, 2008
The latest move by the Ministry of Economy and the Union Cooperative Society to offer a set of 16 essential commodities at fixed prices, at 2007 price levels, is an encouraging move that is expected to help the country's consumers who have been paying an increasingly higher price for essentials every day - cutting deep into their pockets.
With this the government has partnered with the private sector to reduce the impact of soaring food inflation - a good example of public-private sector coordination.
The government earlier cancelled agency agreements that helped cut out intermediaries, remove monopolies, and also helped both parties reach such an understanding.
If this move encourages other retailers to cut the middlemen and reduce costs by directly sourcing and storing essentials, thereby helping to bring prices down, it will serve everyone's purpose.
Inflation, which is in double-digits and rising due to soaring rents and partly due to the weak dollar and dirham, is taking its toll on the country's population. Food inflation is rising dramatically by 30-40 per cent over the last year, and affects the poor disproportionately.
In this light, the government has limited options in helping consumers. So it is right that the government should intervene to protect those who are most affected.
Of course, intervening in the food sector by setting price controls is not in line with free-market principles, but the government's hands are tied in dealing with inflation as long as interest rates and the currency are tied to the dollar.
Although the move might not be the ultimate solution, it might be seen as a temporary reprieve until the government decides to review its monetary policy, along with its neighbours in the GCC.
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