UAE food inflation to 'ease'

INFLATION HOPE: Food and commodity inflation in the UAE should ease this year after the Gulf state imposed price controls, according to the government. (Getty Images)

Food and commodity inflation in the UAE should ease this year after the Gulf state imposed price controls, but global trends will continue to drive prices, the Ministry of Economy said on Thursday.

The ministry has signed agreements with a number of supermarket chains in the second-largest Arab economy this year to keep prices of several basic food items at 2007 levels after inflation hit a 20-year peak of 11.1 percent last year.

The UAE also ordered a country-wide lifting of customs duties on cement and steel in March to stabilise construction costs.

"When it comes to food and commodities, there will be a positive impact on inflation from [these agreements]," ministry under-secretary Mohammed Abdul Aziz Al-Shihhi said.

Food, beverage and tobacco prices rose 5.6 percent last year, while rents jumped 17.5 percent, according to official data released last month.

Asked if overall inflation would decline, Shihhi said "hopefully".

"But the trend globally doesn't look promising. It is too early to make a prediction now. About 56 percent of inflation last year was from rents, which is out of our control," he added.

Analysts polled by newswire Reuters in May said they expected UAE inflation to rise to 11.8 percent this year.

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.

The UAE economy ministry would soon unveil other measures to protect consumers from rising prices, but would continue with a no-subsidy policy, Shihhi added, without giving details. (Reuters)

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UAE food inflation to 'ease'
Posted by Keshan Perera, Abu Dhabi, UAE on 5 July 2008 at 13:46 UAE time

The government has cut the duties on imports of Cement & Steel items whereas no basic food items were exempt from import duties. How ironic is that? It seems the gov is only protecting their investments and even for a short period of time does not care about the people residing and working in UAE. Obviously the rent is sky rocketing these days but if you ask yourself who owns the majority of residence, villas and apartments, it would be the local Arabs and not any foreigners.

The ministry should firstly exempt all import & other duties pertaining to food items so the inflation can be reduced.

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