Friday, Jan 21, 2011
Gulf News
Ministry seeks to strike a balance
Official says cost of flour has remained the same since June last year
Dubai More than 30 suppliers have agreed to reduce the prices of essential foodstuffs by 20 to 30 per cent across the UAE starting March 1 after a recent meeting with the Ministry of Economy, according to a ministry official.
“It is a social responsibility towards the country they live in to bear some of the costs,” said Dr Hashim Al Nuaimi, manager of the ministry’s Consumer Protection Department.
Suppliers agreed to reduce the prices of rice, chicken, cooking oil and dairy, among other basic staples during a two-day meeting with the ministry on January 17, he said.
“Food prices in the UAE are stable,” he insisted during an interview with Gulf News.
“We hope that global prices do not increase. We are in constant contact with retailers and suppliers to keep prices in check.”
Average jump
Food and beverage prices showed an average increase of 4.8 per cent in 2010 compared to 0.8 per cent in 2009 according to the Emirates consumer price index, noted Dr Giyas Gokkent, group chief economist at the National Bank of Abu Dhabi.
But the ministry does not need to take the same measures today that it did in 2008 when food prices hit record highs and it asked retailers to freeze them, Al Nuaimi said.
“There is no increase in prices. By how much has sugar gone up in the UAE?” he said. “Products are available in the UAE, there is no shortage. All traders have stocks, there are no problems in the UAE,” he said.
The UAE, which depends on imports for its food supplies, has a $4 billion (Dh14.69 billion) annual import bill that is expected to grow as the population increases.
The ministry is currently compiling a list of 650 products in 10 categories from 40 retailers on a weekly basis to determine whether prices are increasing locally, Al Nuaimi said.
“We told retailers not to agree on price increases from suppliers unless they get permission from the ministry,” he said.
Traders are facing the dilemma of high costs of raw materials on one hand and a ministry decision to keep prices stable on the other. “Inevitably prices will have to rise,” said Gokkent.
Companies have the right to apply for permission to increase prices if costs increase in the product’s country of origin, Al Nuaimi said.
The ministry has a system with which it determines which products merit a price hike, he said. It checks the product’s previous price levels, price in country of origin and neighbouring countries, does an economic analysis of the break-even point and then decides on a fair price, he explained.
“There has to be a balance between the needs of the retailers and the consumers,” Al Nuaimi said.
Food and beverage prices are expected to drive up inflation in 2011, said Gokkent. “Because of the increase in food, utilities and fuel, we think there will be upward pressure on the consumer price index from those categories. But I don’t think the increase will be anything like 2008 levels,” he said.
Dubai The Ministry of Economy will not agree to the increase in bread prices requested by bakers in the UAE because it does not see any rise in their production costs, according to a ministry official.
“Flour prices have remained at Dh102 for a 50 kilogramme bag since June last year. There is no increase in costs. They are just saying that to raise their prices,” Dr. Hashim Al Nuaimi, Manager of the Consumer Protection department, told Gulf News. “It’s unjustified.”
Earlier this week, bread makers complained that their production costs rose by 30 to 35 per cent, as raw materials and fuel prices increased.
“It’s not just flour. Sugar, cooking oil and ghee also increased,” said Manzoor C.M., General Manager of Al Khayam Bakery, in response to the ministry’s statement. “If the ministry wants, we can give them price details with proof of invoices.”
The 10-kilogramme margarine tub rose from Dh41 in December to Dh60 in January, he said. A 50-kilogramme bag of sugar cost Dh138 in August and they now buy it for Dh167 while cooking oil prices increased by Dh25, he added.
“We are just breaking even now. We used to produce 30,000 bags of khubs a day, now we make 10,000 to 12,000 bags,” he said.
If the situation continues, bakeries are forced to switch production to more profitable items like Indian sweets or pastries, said Faizal Mohammad, operations coordinator of Hot Breads in Dubai. “If the ministry does this, we have to stop, we can’t do this anymore. The ministry and everyone knows there’s huge increases in raw material prices.”
He hoped the ministry would take some action to help them. “We’re staying here and giving back something to the country. We have to get something back.”
figures
Rising rates
4.8%
increase in food and beverage prices
$4b
UAE’s annual food import bill
FRANCOIS NEL/Gulf News Archive
Weekly list
A supermarket in Dubai Marina. The ministry is currently compiling a list of 650 products in 10 categories from 40 retailers on a weekly basis to determine whether prices are increasing locally.
reaction
Quote Attribution
Quote Title
There is no increase in prices. By how much has sugar gone up in the UAE? Products are available in the UAE, there is no shortage. All traders have stocks, there are no problems in the UAE.”
Dr Hashim Al Nuaimi
Manager of Consumer Protection
By Deena Kamel Yousef?Staff Reporter
Gulf News 2011. All rights reserved.
