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Thu 27 Mar 2008 12:35 PM

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UAE urges supermarkets to import directly

Ministry of Economy encourages retailers to cut out middlemen to lower pricess.

The UAE Ministry of Economy is encouraging a group of supermarkets to eliminate middlemen from imports of 15 food items to try to control prices, state news agency WAM reported.

The government passed a law in June 2006 to allow supermarkets to import items, including cooking oil, rice, flour, fish, meat, tea and cheese, without going through importers, WAM said.

It is now implementing the law, starting with the Union Cooperative Society, which operates about 16 stores across the UAE.

"The ministry encourages cooperatives to import food stuff collectively through the cooperative union, which will offer competitive prices for the benefit of consumers," economy ministry undersecretary Mohammed bin Abdul Aziz said, according to Wam.

"The move to liberate these basic commodities aims to eliminate monopoly and cartels, which increase the prices of foodstuffs," he said.

Inflation in the UAE hit a 19-year high of 9.3% in 2006, the latest available official figure. It had probably reached 10.9% last year, National Bank of Abu Dhabi, the country's second largest lender, said last month.

The UAE government, which has kept its dirham pegged to the dollar at the same rate for the last 11 years, aims to reduce inflation to 5% this year, UAE Minister of Economy Sultan Bin Saeed Al-Mansouri said this month.

The Union Co-op, which expects some food prices to rise as much as 30% this year, said earlier this month it had agreed to fix the retail price of 16 foods this year to help combat inflation and encourage other retailers to do the same. (Reuters)