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UAE consumers had been turning more cautious over their weekly spending patterns, to better counter the impact of inflation on their bills. On food purchases, they could soon be getting some relief. Image Credit: Abdul Rahman/Gulf News

Dubai: For the first time in months, UAE consumers should soon be paying less on their food purchases, as regular supplies of wheat and other staples emerge from Ukraine and other import sources.

“India has eased its sugar exports ban; and with Ukraine, it’s not just wheat shipments, even cereals and cooking oils are starting to come out,” said Dhananjay Datar, Managing Director of Al Adil Trading, which operates a network of stores selling ethnic Indian foodstuffs.

“This will translate into reduced prices in the UAE and - ultimately - benefit consumers.”

That’s the crux – how soon will consumers feel the benefits? So far, “The impact on retail prices is negligible so far,” said Datar. “This is due to varied factors - inflation, the higher cost of transportation, are still adding to cost pressures.”

According to market sources, wheat prices should drop by 15-20 per cent by October, and the same range would apply to sugar as well, once India frees up the commodity for exports. On cooking oils, the price drops by September/October would be in the range of 5-10 per cent and then drop further towards the end of the year when more supplies hit the global markets.

Most food prices are down, but it will take a little more time for this to be reflected at the UAE retail level

- Dr. Dhananjay Datar of Al Adil Trading

UAE consumers remain extra cautious

Hypermarket and grocery operators talk of changes in consumer spending patterns starting to show up more regularly. More shoppers are doing their weekly spending on food purchases when they are assured of discounts, or when the retailer provides special promotions cutting across categories. Where possible, consumers are also spending less on non-essentials as they take on the challenge of inflation and what it does to your cash in hand.

So, if shipments from Ukraine continue, the feeling is that at some point, this will help bring down prices on vital food commodities. (All through these months, UAE has had regular supplies of wheat, as part of a deal struck with India and which meant keeping retail-level prices within set limits. The supply deal was initially for four months.)

Help from shippers too

The other factor that has driven up food prices through these 2 years – and which accelerated from last March after the launch of the Ukraine conflict – has been shipping and logistics costs. Here too, there are signs of the worst of the crisis being over.

At this moment, we are not facing any major hassles and supplies are regular.

- Harish Tahliani, Managing Director of Arab & India Spices

“Fortunately, every day we are witnessing the situation being resolved by all the shipping lines,” said Harish Tahliani, Managing Director of Arab & India Spices. “At this moment, we are not facing any major hassles and supplies are regular.

“With wheat, recently, we commenced processing whole wheat flour at our UAE facility, and the trial batches. We will now have a continuous need of wheat to cater to the demand of whole wheat flour in the UAE.”

On spices, prices are still running high
With spices, a staple for a large demographic based in the UAE, there continues to be significant increases in their prices, especially of red chili, coriander, etc., from India.

"This is due to the weather in India and the shortage of supply has set off an exponential price hike in spices," said Harish Tahliani of Arab & India Spices. "When it come to red chili, the price has increased nearly 80% from the beginning of this year..."

Regular price checks

Through recent months, the UAE authorities had stepped up monitoring of retail food and other consumer essentials. The message from the authorities have been clear to retailers – be prudent in passing on the higher costs to shoppers. Where costs have to be passed on, the retailers will have to first clear it with the concerned ministry.

“Due to its resilient food security and supply chain policies , the UAE has been managing effectively,” said Sudhakar Tomar, President of India Middle India East Agri Alliance, which funds agritech startups. “There’s been some respite in recent weeks - the Food and Agriculture Organization's (FAO) food price index averaged 140.9 points in July as opposed to 154.2 points in June.”

Due to its resilient food security and supply chain policies , the UAE has been managing effectively

- Sudhakar Tomar, President of India Middle India East Agri Alliance

But it’s still early days when it comes to food prices cooling off after reaching a boiling point mid-year. UAE shoppers will hope that the trend starts to pick up in the coming weeks. If one facet of inflation costs – higher food prices – gets mitigated, that in itself will be some relief.

The Produze team has just received a $2.6 million seed round as it continues with expansion plans.
Agritechs and food prices
Produze is an agritech platform that connects sellers with retailers. A sizeable part of its current operations are in the UAE, and Produze received a $2.6 million seed funding recently.

“Change in food commodity prices may not change our cost of operations,” said Ben Mathew, co-founder and CEO. “However, price changes will change some of the sources the UAE market procures from. In such cases, we can help retailers continue to get consistent quality and competitive prices.

“Currently 80 per cent of our operations are in the UAE with 20 plus prominent customers like Shaklan, Falcon, Alwan etc. We have a UAE based team with our own importing operations, warehousing and distribution to enable emerging retailers and brands to access agri produce directly from source.”