Food prices continue rising in Dubai

Dubai Despite calls to freeze prices of basic commodities, foodstuffs in Dubai have increased considerably and could continue to rise until 2015, a report said on Tuesday.

Based on its price monitoring from first quarter 2007 to the same period this year, the Dubai Chamber of Commerce and Industry said the prices of staple food items such as bread, flour, milk and rice in Dubai have soared past the UAE's 2006 headline inflation rate of 9.3 per cent.

Forecast

The Economist Intelligence Unit (EIU) has also issued a price forecast summary which predicted that by next year alone, prices of grains will increase by 3.7 per cent, sugar by seven per cent, oilseeds by 1.6 per cent and food, feedstuffs and beverages by 1.3 per cent.

The Dubai Chamber said that based on EIU's figures, "the price of food and beverages internationally is expected to continue to rise in the short-term future, although at a diminishing rate."

The Dubai Chamber has studied the average increase in the price of ten different product groups that are considered staple for the consumer's diet. For each product group, between 29 and 68 different products have been analysed on a quarterly basis.

The study found that all ten major food groups have posted significant increases, with flour experiencing the highest average rise of 57.72 per cent over the past year.

The prices of some wheat flour brands surged by as much as 145 per cent, corn flour by 162 per cent and wholemeal by 164 per cent between 2007 and 2008.

The prices of rice, bread, eggs and powdered milk have also increased by 44 per cent, 36 per cent, 49 per cent and 35 per cent respectively.

"These are significantly more than the headline inflation and are thus adding to the overall cost of living in the UAE," the report said.

Composition

Food comprises 14.4 per cent of the total basket, according to the weights in the Ministry of Economy's consumer price index.

The Ministry of Economy has formed alliances with various hypermarkets in the UAE to freeze the prices of certain essential food items at their 2007 levels after inflation rose to a 19-year peak of 9.3 per cent in 2006, the latest available official government figure.

Kamal Vachani, director of the Al Maya Group, admitted that the margin on food products is already very low, prompting retailers to sell some items on "cost to cost basis" and others at "below the cost."

However, he added, the retailers in the country are taking all efforts to maintain the prices at their supermarkets "as much as possible."

"The increase in food prices is not a problem specific to the UAE. The food prices are rising all over the world.

"The ban on certain food products from India has led importers to import goods from [other countries]. The retailers will cope up by sourcing foodstuff from places like Thailand, Ind-onesia, Sri Lanka and Pakistan," Vachani told Gulf News.

The Dubai Chamber said that the sharp increase in Dubai's food prices was attributed in part to the global trend in food costs, which, according to the United Nations, have risen by 40 per cent in the past nine months.

The increasing food costs in the country have been exacerbated by the weakening of the UAE dirham, which remains pegged to the US dollar, against currencies of major food suppliers and have put additional pressure on domestic inflation.

Have your say
Did this report worry you? Are you prepared for the increased prices? Should the government subsidise goods to make them affordable for the middle class?