Cost of food starts to come down

Food prices are starting to ease and supermarkets promise consumers will continue to see a drop in the cost of staples.

After months of rapid inflation there are at last signs of easier times ahead for consumers.

ABU DHABI // Food prices are starting to ease and supermarkets have promised that consumers will continue to see a drop in the cost of some staples. Since The National conducted its first survey of the price of a shopping basket a year ago, shoppers have seen soaring inflation, even on some of the most basic foods.

However, after signs late last year that prices were beginning to stabilise, items tracked by The National have now started to fall, albeit to a small extent. The findings are in line with promises made by leading supermarkets towards the end of 2008. All major chains said prices would be reduced in the first few months of 2009. The Ministry of Economy (MoE) also believes consumers can expect more reductions over the coming months, and said that the public was reporting "wide satisfaction" nationwide with current food prices.

The survey was first conducted on March 25 last year and then again in July, August, September, December and late last month. Items were inspected at three of the largest supermarkets in the city: Carrefour at Marina Mall; LuLu at Al Wahda Mall; and the Abu Dhabi Co-op at Abu Dhabi Mall. The 10 items tracked at LuLu rose by an average 50 per cent during the year. The nine items tracked at the Co-op went up by an average 31 per cent, and 12 items at Carrefour rose by an average 27 per cent.

Fresh imports have been the most susceptible to price rises. Indian red onions at two supermarkets increased by 200 per cent - from 75 fils to Dh2.25 (US$0.20 to 0.61) a kilogram at LuLu and 65 fils per kilo to Dh1.95 at the Co-op. Onion prices have not changed in the last quarter at Carrefour and Lulu, but dropped 30 fils per kg at the Co-op. Between August and September, they increased by 40 per cent at Carrefour. Other items to have shot up include cucumbers produced "locally" - the country is not specified. At LuLu, they jumped from Dh1.75 per kg to Dh5.95 - or 240 per cent. The same product went up 132 per cent at Carrefour, from Dh1.70 per kg to Dh3.95.

At the start of last month, the Ministry of Economy promised to reduce the prices of 1,000 items to coincide with Gulf Consumer Protection Day. Last week, Mohammed al Shihi, the director general of the ministry, said the MoE would meet vendors and suppliers "to make sure that the drops in the prices are matching the international trend" and reflected the reduction in fuel costs. The MoE also disclosed it was likely to establish a court to protect consumer rights.

Most items shot up in price in all supermarkets during the summer, coinciding with high fuel prices worldwide, which drove up the costs of transport and production. Onions rose by an average 78 per cent across Abu Dhabi in the five months from March to August. Among other commodities to rise in the early part of the year were rice, bottled water, eggs, cooking oil, Australian lamb and Dutch beef tomatoes.

However, after a summer peak, prices for most items remained the same or fell in the following months. Only two items fell in price over the year - Arabic flat bread at Carrefour and Dutch tomatoes at LuLu. The only products not to change price at all were two-litre bottles of Al Ain full-fat milk and of Almarai full-fat milk imported from Saudi Arabia, which remained at Dh10 each throughout the year.

The findings echo statistics gathered by the UN's Food and Agricultural Organisation, which reported sharp rises in world food prices between March and July last year, since when a steady drop had occurred. Imported items rose by an average 42 per cent at the Co-op, 39 per cent at LuLu and 25 per cent at Carrefour. Items produced locally went up 65 per cent at LuLu, 23 per cent at Carrefour and eight per cent at the Co-op, although the calculations were made with only a handful of items.

Annalise Curtis, 37, a British housewife, moved to Abu Dhabi with her husband, an engineering consultant, in December 2007. While she said she shopped at Spinney's for British items, her weekly shop was usually at LuLu. The mother of two said: "It took me a while to realise what was a sensible price to pay for food here, and I found that things were very, very different from one place to another. "I really noticed things going up, especially things like nappies. It's difficult to tell exactly because I don't buy the same things from one week to the next. But when you come every week and you get used to seeing the prices every time you come, you spot changes.

"I guessed it was maybe something to do with the time of year or something like that, but I saw things changing with the price of meat last spring. When things fly up, part of you thinks 'Well, they'll be down again soon'. I don't think I've seen that, so I think people just stop resisting and buy these things anyway." Dr Hashim al Neaimi, the manager of the consumer protection department of the MoE, said: "During the first quarter, we have seen a significant decrease in prices of supplies, such as powder milk. We are co-ordinating with major rice suppliers and holding talks with large outlets to debate any potential increase in prices."

The second phase would consist of a series of meetings to discuss the prices of staple goods such as sugar and flour. "In our field tours, we have seen that the prices of many goods have gone down, and there is a wide consumer satisfaction across the UAE about the present phase. "We are still monitoring the markets and are hoping for even lower prices in the next phase." Mr al Neaimi added: "There is a partnership between the ministry and some major suppliers in the UAE. There is an open market, and cooperatives and outlets are allowed direct importation. So this kind of partnership between us and the suppliers has led to a decrease by 30 per cent in prices of strategic goods, and this has been clearly noticeable in the previous phase.

"We are looking forward to even lower prices in the coming period." Georges M J Mojica, the general manager of the Abu Dhabi Co-operative Society, said: "The major products have been coming down, oil has been coming down, flour has been coming down. So we cannot say we are in a country where we're going to be starving. "Nobody wants to exaggerate, but you've got the cost of doing business which is growing in UAE. And somewhere or another you've got to pass the bill to somewhere.

"It's not like last year. We had a huge increase in prices due to the raw materials in food staples. Now it is over. There are a lot of products that are coming down these days due to the economic situation." Mr Mojica said the increases were largely down to suppliers raising prices, but that retailers would not independently choose to charge more. "We are in a situation where we have enough competition in town, a number of retailers. Nobody is going to be taking advantage of a situation to hike the price. It would be suicidal. The competition is there and the prices are coming down from every side."

V Nandakumar, the corporate communications manager with the Emke Group, which runs the LuLu chain of supermarkets, said: "The prices of a lot of commodities skyrocketed. It was nothing unique to this country or this economy, it was happening all over the world." The chain agreed price caps on 35 key items with the MoE, and offered cheaper alternatives to the more commonly available products. "The price caps were a necessity last year when the price of essential products skyrocketed due to global reasons. Now the prices of lots of commodities are coming down, again due to the global conditions. I can't generalise all the categories, but there have been dips ranging to seven per cent to 15 per cent to more than 30 per cent."

Further price rises were unlikely, he said. "The mood is kind of sombre. So none of the major retailers are looking to increase the prices." Carrefour did not respond when asked to comment. @Email:[e-mail]