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UAE: 5 reasons why grocery prices are set to decrease further even as world fights inflation

According to a recent government directive, retailers are not allowed to hike rates of 9 basic food items

Published: Tue 15 Nov 2022, 8:02 AM

Updated: Tue 15 Nov 2022, 5:44 PM

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File photo

File photo

As the world battles inflation due to the higher cost of consumer goods, grocery prices in the UAE are expected to drop further in the months ahead due to a decline in freight rates, regular and uninterrupted supply of basic consumer items for UAE importers, strengthening of dirham and accessibility to new markets.

UAE retailers praised the pro-market and pro-consumer policies adopted by the authorities to keep commodity prices in check. Last week, a new policy was announced in which retailers are not allowed to hike prices of nine basic consumer goods including cooking oils, eggs, dairy, rice, sugar, poultry, legumes, bread and wheat. This is a preliminary list, and more items could be added, the UAE government said.


Earlier this year, the UAE approved a new policy under which suppliers will have to submit evidence to justify price increases of basic items such as milk, chicken, eggs, bread, flour, sugar, salt, rice, cooking oil, mineral water and others.

The runaway inflation in the US and other countries has prompted central banks to raise interest to rein in inflation.

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Dr Dhananjay Datar, chairman and managing director, Al Adil Trading, said the UAE’s decision to control prices of nine basic items will benefit consumers as prices of some of the items were on the rise because of the wheat and sugar ban by India.

Dr Dhananjay Datar

Dr Dhananjay Datar

However, he said, the prices of most other commodities are coming down because of a decline in freight rates which have dropped from $1,150 to $190 per 20ft container.

“Currencies of many countries which were the main source markets for UAE importers have declined against the dirham. In addition, wheat imports from Ukraine have also started so in the next couple of months, the prices will drop due to new supply and a drop in freight rates. Hence, this is also beneficial for the UAE consumers and will result in a drop in prices of about 10 to 15 per cent in the coming months,” added Dr Datar.

The UAE dirham, which is pegged to the US dollar, has gained against many emerging market currencies and this made imports cheaper for local traders and importers.

Al Adil Trading chairman added that the UAE is now sourcing sugar from Europe and Brazil while local sugar firms are also producing sugar on a good scale, hence, prices are stable in the UAE.

“Globally, new crops of basic commodities are good all over the world and the new supply will hit the markets in January-February. Therefore, this will also have a good impact on the prices for consumers,” he added.

Kamal Vachani, group director at Al Maya Group, said they follow the guidelines and instructions of the authorities related to commodity prices in the country.

Kamal Vachani

Kamal Vachani

Vachani added that prices of basic commodity items are steady and will remain stabilised.

“The UAE has maintained to keep prices stable because the government is very pragmatic in its approach and they look at prices from the consumers' perspective as well. The government ensures that the residents get the best prices and they shouldn’t be burdened with high rates. And the latest initiative to control the prices is in that direction,” he said.



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