The UAE Ministry of Economy said on Wednesday it agreed to allow the Union Cooperative Society chain of markets to sell 16 basic foods at a discount to help offset the effects on inflation.
The agreement covers goods such as cooking oil, rice and flour, the ministry said in a statement.
"The price of the dollar is getting weaker and the price of oil is going up," Ministry of Economy Undersecretary Mohammed Ahmed bin Abdul Aziz told reporters in Dubai. "Our efforts to curb rent with rent caps and controls of food prices will help reduce the impact of inflation."
It was not immediately clear how the price-fixing mechanism, which will be introduced in phases during the year, will work.
Inflation in the second-largest Arab economy hit a 19-year high of 9.3% in 2006 and probably accelerated to 10.9% last year, the National Bank of Abu Dhabi (NBAD) said last month. The UAE's economy grew 7.6% last year.
The UAE is considering a plan to give its citizens discounts on 14 food items, gasoline and cooking fuel to help offset inflation, the head of a consumer protection body said on Tuesday.
The cabinet is studying the plan, which will allow UAE nationals to buy rice, bread, tea, sugar, milk, butter and other basic food items at cost, said Jamal Al-Saeedi, executive manager of the Emirates Society for Consumer Protection (ESCP).
Food prices in the UAE, which pegs its dirham currency to the falling US dollar, will probably jump 40% this year after surging 30% in 2007, Al-Saeedi said last week.
Gulf Arab oil producers are trying to offset inflation by introducing price controls on rents, subsidising food and raising wages.
Earlier this week, the UAE's Economy Ministry set a ceiling on the maximum price retailers are allowed to charge for some basic food items to help stabilise prices. (Reuters)For all the latest business 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.
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