Eating out takes bigger bite

Eating steak might now become rare as top restaurants push up their prices

At Seafire, the cost of surf and turf, which is made up of Alaskan crab and fillet steak, has increased by 32 per cent in the past year to Dh330.

Forget the rising price of supermarket food, the cost of "surf and turf" in Dubai's top restaurants is also set to take a bite out of consumers' wallets this year.

Video:Families react to rising food prices

The parents, UAE residents from different ethnic backgrounds, talk about feeding their families as the contents of their shopping trolleys rise.

The prices of steak and fish dishes at restaurants across the city have increased by as much as 30 per cent over the past year as global prices have risen and hotels take advantage of the Emirates' status as a haven in the region.

"The rise in hotel and restaurant prices is because the UAE has become a premium destination, and after bearing higher costs for a significant amount of time, [restaurants] are now comfortable passing them on," said Tudor Allin-Khan, the chief economist of Alembic HC Securities in Dubai.

Prices of fish, seafood, steak and other fare at restaurants such as Seafire at Atlantis, Ossigeno at Le Royal Meridien and the Grand Grill at the Habtoor Grand have risen by as much as 20 per cent in the past year.

At Seafire, the cost of surf and turf, which is made up of Alaskan crab and fillet steak, has increased by 32 per cent in the past year, from Dh250 (US$68.06) to Dh330.

The increases are some way above the official figures for food and beverage inflation, which account for about 14 per cent of the overall consumer price index (CPI), and rose 5.24 per cent in May over the same month last year, according to the latest data from the National Bureau of Statistics.

"Over the next five or 10 years I can see an environment where prices are likely to continue to move higher," said Mr Allin-Khan.

In recent months, a low overall inflation rate has masked bigger leaps in prices at supermarkets and restaurants.

Weakness in the UAE housing market, the biggest overall contributor to CPI at about 40 per cent, has offset higher prices elsewhere.

Prices at restaurants and hotels, contributing 4.5 per cent to CPI, fell 0.47 per cent in May compared with the same month last year.

Data for Dubai, however, show restaurant and hotel prices rose 3.13 per cent in the first quarter of this year over the same period last year.

"Our food prices have gone up on the whole menu by about 10 per cent, which is the going rate on a yearly basis with rising prices globally," said Phebus Georgiades, the managing director of the Grand Grill.

He said the restaurant has been supported by suppliers, but costs - including for Australian meat - had also been pushed up by the appreciation of the Australian dollar against the dirham.

Last month, the UN Food and Agriculture Organization's Food Price Index was 1 per cent higher than in May, and 39 per cent higher than in June last year.

Mr Allin-Khan said restaurants and hotels were not only raising prices because of higher goods costs but were also capitalising on the UAE's haven status.

Hotel occupancy has increased so far this year in Dubai as unrest in other parts of the region has meant many tourists have avoided troubled destinations and opted for the city instead.

Occupancy in Dubai's hotels increased 0.7 per cent to reach 69.9 per cent during May despite an increased supply of hotel rooms, according to Deloitte.