7 ways UAE is beating price rises, minimising inflation level

Covid-triggered disruptions of global supply chains and the Russia-Ukraine war are among the global issues that are driving up prices of fuel and basic commodities. The UAE is doing all it can to minimise the local impact of global price rises and has succeeded in having among the lowest inflation levels in the world.

Retailers reported a drop in prices of basic grocery items as UAE fuel prices dipped to a seven-month low in October.

Here is how the country managed to keep prices in check:

— Prices of basic items cannot be hiked without approval

Earlier this year, the UAE’s Ministry of Economy approved a new policy to keep price hikes of basic food items in check. As per the policy, suppliers will have to submit evidence to justify price increases of some of the most sought-after items such as fresh and dry milk, fresh chicken and eggs, bread, flour, sugar, salt, rice and legumes, cooking oil, mineral water and others. This group includes more than 11,000 commodities, and suppliers who want to raise their prices due to high import costs must submit all relevant evidence and data. The ministry will then decide on the approval and the rate hike.

— Limiting the impact of global price hikes

In July, Minister of Economy Abdullah bin Touq Al Marri said the UAE has mechanisms and policies in place to contain any unjustified increase in prices of items. The ministry is working with local economic departments and chambers of commerce, as well as “relevant partners from the private sector”, to study the global price rises of commodities. They then work together to “limit the impact of any global price increases in those commodities on the final products sold in the country's markets”.

— Inflation allowances for low-income citizens

The President, His Highness Sheikh Mohamed bin Zayed Al Nahyan, directed the restructuring of the Social Welfare Programme for low-income citizens and doubled its budget from Dh14 billion to Dh28 billion. As part of the scheme, the country announced inflation allowances for:

> Fuel: A subsidy, which amounts to 85 per cent of the fuel price, will be provided to some low-income Emirati families if the rates increase over Dh2.1 per litre. The head of the family receives a monthly subsidy of 300 litres, while the working wife receives an additional 200 litres.

> Food: The government bears 75 per cent of the food price inflation rate for low-income citizens. The value of the subsidy is linked to the change in inflation rates for basic foodstuff items. The allowance can be used at approved outlets selling goods and food.

> Electricity and water: The programme for low-income citizens provides a monthly subsidy of 50 per cent for electricity consumption less than 4,000 kilowatts. A monthly subsidy of 50 per cent is offered for water consumption that is less than 26,000 gallons.

sahim@khaleejtimes.com