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Retailers in the UAE and Saudi Arabia have been increasing their turnover over the past few months as prices for goods and other essentials rose at double-digit rates and merchants were slow to promote in-store.
New research from NielsenIQ shows that sales in the fast-moving consumer goods (FMCG) industry grew by 8.8% year-on-year in the UAE and 6.5% in Saudi Arabia in the third quarter.
The study is based on data from hypermarkets, supermarkets, grocery stores, beverage restaurants, pharmacies and perfumeries.
Soaring inflation pushes consumers to spend more on everyday essentials Fed Implement a series of rate hikes.
“Rising prices are driving growth in FMCG turnover in the UAE and Saudi Arabia,” NielsenIQ said.
According to the study, 77% of UAE and Saudi shoppers “feel” that food prices are rising. NielsenIQ noted that stores in both markets did post higher prices in only 86 food categories, while “promotional intensity” has been declining.
Between July 2022 and September 2022, prices rose by around 10%, with frozen food rising by 19% in the UAE and 15% in Saudi Arabia. Dairy products also rose 18% in the UAE and 14% in Saudi Arabia.
However, in terms of volume, the UAE market fell by 1.5% compared to the first quarter of 2022, while Saudi Arabia saw a decline of 3.6%.
The data shows that shoppers are spending more at retail because of higher prices, but they are also buying less.
“The strong nominal value growth in both countries is clearly driven by higher prices. Most shoppers are now willing to focus on necessities and appear to be increasingly concerned about inflation,” said Andrey Dvoychenkov, general manager for Arabia and Pakistan at NielsenIQ.
“But they are still willing to pay a premium for a product with more features and benefits,” he added.
Overall, consumer inflation in the UAE rose 4.6% year-on-year in April this year, while Saudi Arabia’s inflation rose 3.1% in the year to September, mainly driven by higher costs for food, housing and utilities.
(Reporting by Cleofe Maceda; Editing by Seban Scaria)
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