By Andy Sambidge
Cost of foodstuffs set to continue to rise as sugar, rice prices up 15-20% in Q1.
Inflation in the UAE is predicted to reach up to three percent this year, driven by rising food prices, it was reported on Monday.
The cost of basic foodstuffs is expected to continue to climb after the prices of sugar and rice increased by between 15-20 percent in the first quarter compared with the same period last year, UAE daily The National reported.
Tudor Allin-Khan, the chief economist at HC Brokerage in Dubai told the paper that he expected UAE inflation to reach between 2-3 percent, adding that GCC economies were vulnerable to fluctuations in the price of products because they were reliant on imported food.
“As the global economy improves people earn more and they consume more so the price of food can go up. The processing of food requires energy and the transportation of food requires energy so that too can lead to inflation coming up,” he said.
Consumer prices in the UAE climbed 0.78 percent year-on-year in April led by rising food costs, official data showed last month.
Debt restructuring in the UAE member Dubai is expected to keep price pressures in the second-largest Arab economy muted this year as it continues to recover from last year's downturn.
The heavyweight food and non-alcoholic beverages component rose 4.52 percent in April compared to a year earlier, while the housing material and appliances item of the index rose 7.27 percent.
The UN Food and Agriculture Organisation’s food price index, which tracks changes in foodstuffs such as cereals, dairy, meat and sugar, rose by 7 percent last month compared with May last year, the paper added.For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Rice and sugar are contributing to overall increase in prices of foodstuff. While it is understandable that rice needs to be imported; UAE has a state of the art sugar refinery in Jabel Ali and bulk of its production is exported, when UAE depends on import of sugar. Why can't the government ask the local refinery to first cater to local demand and thus keep the sugar price under control?