Lulu agrees to cap prices to fight inflation

INFLATION FIGHT: Lulu has agreed to cap the prices of 32 basic goods in an effort to fight inflation. Picture for illustrative purposes only. (Getty Images)

Abu Dhabi-based Lulu Hypermarket Group has agreed to a government request to keep the price of several basic food and commodities at 2007 levels to help curb inflation in the UAE.

Gulf Arab states, such as the UAE, Saudi Arabia and Qatar, which peg their currencies to the dollar, are struggling to control surging inflation, fuelled by a five-fold increase in oil prices during the last six years and lower interest rates which are reduced in line with easing US monetary policy.

Inflation in the UAE hit a 19-year high of 9.3% in 2006 and probably reached 10.9% last year, the National Bank of Abu Dhabi (NBAD) said last month.

Lulu, which operates 37 supermarkets and hypermarkets across the UAE, will keep the prices of 32 basic goods throughout 2008, including rice, sugar, oil, flour, tea, butter, milk and poultry, the Ministry of Economy said in a statement on Sunday.

"The move aims to stabilise prices, alleviate inflation, maintain market balance and protect consumers," it said.

The UAE's Union Cooperative Society, which operates about 16 stores, said last month it had agreed to fix the retail price of 16 foods and raise them in line with increases in wholesale prices.

The latest agreements are likely to encourage other supermarket chains in the country of 4.5 million people to hold their prices steady too.

"We anticipate more private sector companies to join the campaign," Economy Minister Sultan bin Saeed Al-Mansouri said in the statement.

Gulf Arab oil producers are trying to offset inflation by introducing price controls on rents, subsidising food and raising wages. (Reuters)

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USER COMMENTS (1 COMMENTS)

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Lulu has agreed to not hike prices?
Posted by VC, Dubai, UAE on Wednesday 30 April 2008 at 09:09 UAE time

I saw the price of flour go up by at least AED 4 in the last 2 weeks. They they are now hiking up their prices more than your average convenience store. They used to be a cheaper alternative to other hypermarkets but they have stopped being cheaper. They are getting more expensive than hypermarkets.

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