UAE: Rise in fresh food prices blamed on regional tension
Dubai's economists and businesses attributed the upward trend of fresh food prices to a combination effect of increasing demand, decline in the value of US dollar as well as to the political tension in the region.
According to latest price index by Dubai Chamber of Commerce and Industry, the overall fresh food prices rose 2.3 per cent in July 2013 compared with June 2013.
The index shows that the upturn was due to increase in the price of the main fresh food items led by the remarkable price increase in vegetables at 11.8 per cent followed by fresh fruits at 1.6 per cent. Price of fresh fish and seafood recorded marginal increase at 0.5 per cent.
However, fresh meat and poultry witnessed price drop at 3.1 per cent, according to fresh food index for July 2013.
In comparison with the same period last year, the price of fresh food has increased by 4.3 per cent despite the Ministry of Economy's attempt to fight food price increase across the UAE.
Vasi Khan, Secretary General of the Foodstuff Business Group in Dubai, said: "The low [exchange] rate that US dollar showing in the last few weeks has resulted in import inflation across the UAE."
Giving a clear justification to the food price increase in Dubai, he added that since the UAE imports most of its food stuff, the decline of US dollar rate has a direct effect on the local market prices. However he added that it is difficult to calculate the excact impact of imported inflation on the price increase.
Importing food stuff from markets like Brazil, Syria, Lebanon and others which are quietly affected by dollar rate, will definitely lead to hike in purchasing prices as well as the selling prices in Dubai will automatically increase.
Kheder Al Qawasmi, Owner of Al Qawasmi for Fruit and Vegetables Trading, told Gulf News that there are many reason behind the drastic increase of fresh food prices in Dubai.
It is common that the political situation has a great effect on pricing mechanism in general. And while most of the fresh food stuffs are imported form certain countries which are witnessing unrest, traders are facing a lot of obstacles as well as the market witnessing aggressive competition that lead to price increase, he said.
"Blocking the land cargo route from Syria and Lebanon, UAE's leading import markets for fresh food, as well as banning the Syrian drivers from entering Gulf region has ended up in shortage of food stuff."
According to the Chamber index the tomato prices recorded the highest increase among vegetable group at 21 per cent followed by capsicum at 19.6 per cent, cucumber and lettuce at 12.3 per cent, eggplants at 16.2 per cent, onion at 6 per cent.
Since ten years back we have never experienced such price as the ones we have during Ramadan this year.
"While the cost of a box of tomato hardly could reach Dh20 today it increased to Dh28 and sold out at Dh40 during this month."
UAE leading Economist, Dr. Abdul Hamid Radwan, said despite the fact that prices increase is usually affected by all factors related to US dollar rate and political situation; however demand remains a dominant factor in food price increase during Ramadan.
The individual consumption per consumer is usually increase by 20 to 30 per cent during Ramadan, thus the demand would be higher and prices will increase automatically, he added.