[ad_1]
Here’s how the country is managing to keep prices low amid high inflation in the US and Europe
Groceries such as bread, cheese, fruit and vegetables, and soft drinks are more economical in the UAE than in the US and European countries.
This is thanks to a government push to freeze prices, low fuel prices, increased local production of perishable goods and a stronger dirham making imports cheaper.
Some commodities, such as fruit and vegetables, are more than 50 percent cheaper in the UAE than in some developed countries due to low taxes in the country, local retailers and economists said.
Globally, inflation has been a challenge for governments. While food and fuel prices have skyrocketed in the rest of the world, inflation in the UAE is relatively low compared with its developed market peers.
The inflation rate in the UAE is 6.77%, lower than the 9% in European countries and almost on par with the 6.5% in the United States.
Recently, there have been shortages of onions, wheat and other commodities in the Philippines and Pakistan, leading to sharp price increases in those countries.
In the UAE, nearly 60% of the current Consumer Price Index (CPI) basket includes housing (utilities), transport and food costs.
Vijay Valecha, chief investment officer at Century Financial, said that barring the recent increase in rental prices, housing and utility costs in the CPI have been falling for most of the past 3 years.
“Most of the credit for the stabilization of food prices can also be attributed to the UAE Cabinet decree freezing the prices of basic commodities,” he said.
In November 2022, the UAE Cabinet adopted a new pricing approach for basic consumer goods. These include products such as cooking oil, rice, sugar, dairy, bread and wheat. Also, for all essential everyday FMCG and consumer goods, suppliers who want to raise prices due to high import costs must submit all relevant evidence and data to the authorities.
UAE consumers feel benefit of lower prices
Simon Ballard, chief economist at First Abu Dhabi Bank, said inflation remains a global challenge, but not an issue for the UAE and other Gulf states.
Dr Dhananjay Datar, chairman and managing director of Al Adil Trading, said grocery prices could fall further due to lower freight rates and a stronger dirham.
“Generally, it takes about two months for the price to be accepted by consumers. Now that the price is coming down due to the drop in shipping costs in the past few months, UAE consumers will soon realize the price drop. Also, there is a lot of competition, so , companies hope to sell at lower prices. Commodity production has been very good and this will be reflected in prices for UAE consumers in February 2023 and March 2023,” he said.
Dr Datar expects residents to benefit from lower prices for rice, cooking oil, wheat, pulses, spices, tea, coffee and grains in the coming months.
70% cheaper in the UAE
Vijay Valecha said everyday food items such as bread, local cheese, eggs and poultry products in the UAE are cheaper due to local production and relative proximity to where they are produced.
“The relative distance of producing countries such as India and the strong purchasing power of dirhams mean that vegetables and fruit are affordable in the UAE. Apples, oranges, tomatoes and onions are 50-70% cheaper in the UAE compared to the US. Likewise, the Bread is almost 55% cheaper, cheese is about 20% cheaper, a bottle of water is about 65% cheaper and soft drinks are half the price,” he added.
Other prices that are more affordable in the UAE compared to the EU and US include taxi fares, fuel, gold, food, rent outside the city center area, electronic equipment, clothing and luxury items.
“Since gasoline prices are 30% lower compared to developed countries, taxi fares here are half of what they are in the US.”
Also read:
[ad_2]
Source link