UAE signs latest price fixing deal

PRICE FIXING: Baniyas Cooperative Society has agreed to keep prices of 56 basic food items at 2007 levels. (Getty Images)

The UAE said on Tuesday a supermarket chain had agreed to fix the price of 56 basic food items at 2007 levels, the latest in a string of similar deals with retailers designed to curb inflation.

The Ministry of Economy of the second-largest Arab economy has been trying to control the price of food after inflation surged to a 19-year peak of 9.3% in 2006, the latest available figure.

Inflation in the world's fifth-largest oil exporter probably hit 10.9% last year, according to an estimate from the National Bank of Abu Dhabi (NBAD).

So far this year, the UAE's Union Cooperative Society, which operates about 16 stories, French supermarket retailer Carrefour, and Abu Dhabi-based Lulu Hypermarket Group have agreed to fix prices of some food items to curb inflation.

RELATED: Carrefour holds prices at 2007 levels

RELATED: Lulu agrees to cap prices to fight inflation

On Tuesday, Baniyas Cooperative Society signed a similar agreement.

"Baniyas Cooperative will fix prices of 56 basic food commodities at 2007 levels this year," Mohammed bin Abdulaziz Alshihhi, the ministry's under-secretary for planning, said in Abu Dhabi.

"These initiatives are aimed to make sure there is stability in prices of basic commodities and consumers do not suffer," he said.

Soaring food prices are a main driver of inflation across the world's biggest oil-exporting region, where most states, including the UAE, peg their currencies to the ailing dollar, which raises import costs.

Global commodity prices have also been soaring, leading some food prices to surge 30% in 2007, the Emirates Society for Consumer Protection said in March.

The ministry plans to sign similar agreements with private sector retailers, Alshihhi said.

Gulf oil producers are trying to offset inflation by raising subsidies, introducing price controls on rents and boosting wages.

The UAE's economy minister said last week meeting a 5% inflation goal this year would be "a miracle". (Reuters)

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