Bargain eating in Emirates, except for the crumpets

Although most of the UAE's food is imported, basic grocery items here are competitively priced compared with other countries.

Annie Miekle hardly ever eats out at restaurants and instead loves cooking at home.

When it comes to buying most of the products she uses for her culinary escapades, Ms Miekle, 31, who lives in Dubai, says the UAE is a lot cheaper than her native Canada.

Graphic:

The National's food price survey The National compares the cost of 40 goods in the UAE with their prices around the world. See the results here (PDF).

"Here, I do find that a lot of things are really, really cheap," she says. "Basic stuff is cheap and it's the sort of higher-quality, organic stuff that is expensive."

Other expatriates also say basic foods are cheaper here than in many other places, although the UAE imports most of its food.

Davide Rizzo, an entrepreneur who moved to the Emirates three months ago, says supermarket food is much cheaper here than Europe.

"The fresh fruit and vegetables I was used to consuming in Europe, like tomatoes, are not always available at good quality and decent prices here," he says. "[But] generally, food shopping in Dubai has been much less expensive."

According to a price comparison by The National of nearly 40 products in Carrefour Hypermarket in the UAE, the retailer's prices fare well next to well-known peers from around the world. Carrefour, which is 75 per cent owned by the UAE company Majid Al Futtaim, is the biggest grocery retailer in the Emirates, according to Euromonitor International, a research and information consultancy. Carrefour Majid Al Futtaim declined to comment.

For basic items such as flour, rice, bread and potatoes, Carrefour in the UAE offers lower prices than are shown on websites such as Tesco.com in the UK, Carrefour.fr in France, Coles.com.au in Australia and Safeway.com in the US.

Even for many branded products such as Coca-Cola, Heinz Baked Beans and Kellogg's Corn Flakes, prices in the UAE compare favourably to global supermarket prices.

Given that the UAE imports more than 85 per cent of its food, shoppers might be pleasantly surprised to find their cash goes further here.

But industry experts say a combination of factors results in lower prices in the UAE, including the Government's decision this year to freeze the prices of 400 items in 70 supermarket outlets.

"Absolutely the controls have had an effect," says Simon Williams, the chief economist at HSBC Middle East. "You do get the kind of shifts in global commodity prices mirrored in retail because of the price controls, and that has a knock-on effect on the other goods the shop sells."

The Government launched its pricing campaign amid civil unrest in parts of the Middle East and North Africa that was triggered in part by rising food prices.

Prices of sugars, oils, fats, dairy and meatsrose dramatically in 2009 and last year, peaking at record levels in February of this year, more than 50 per cent higher than 2008, according to the UNFood and Agriculture Organization's Food Price Index.

Global prices have since moderated. But intervention is not the only reason that prices are relatively low across the Emirates, says Michael Wright, the chief executive of Spinneys in the Middle East. "Violent" competition among retailers keeps prices low, he says.

"The majority of people in the [Gulf] region are still buying lower-priced products. They are buying the staples, and compared to commodity products in Europe and the US, they are cheap," Mr Wright says.

According to The National's comparison of staple items, Carrefour in the UAE had the cheapest basket of basic foods, followed by Tesco in the UK, which was 5 per cent higher.

Branded products are also cheaper in the UAE than in some other countries because import duties are "negligible", says Mr Wright, and brands are not subject to taxes such as value-added tax levied in the UK, which adds 20 per cent to the price of a bottle of Coca-Cola.

Fred Watts, the operations director at Almaya Supermarket, agrees that UAE import duties on food are not high by international standards.

"I would say that food prices [are] of a similar price but it depends on the commodity. In some cases it could be lower than other places around the world," he says. "You have to be specific to each item."

Lee Linthicum, the head of food research at Euromonitor, says the presence of global companies in the Middle East also lowers the cost of branded goods.

"There's a few major players with big facilities in Dubai, Bahrain and in Kuwait," he says. "So the products are more or less in the neighbourhood."

He says shipping is also likely to be cheaper than in Europe and the US because of fuel subsidies.

Companies such as Dubai Refreshments, which bottles Pepsi, and Unilever, which has a tea factory in Jebel Ali, can get their products to supermarkets cheaply and quickly.

"Major brands are well established in logistics and supply chains in the region. They are very efficient," says Mr Wright.

Retailers here take a smaller margin than many of their counterparts around the world, which also contributes to lower prices in the UAE.

Big supermarkets in the US and Europe typically take an average 30 per cent markup across all products, whereas for retailers in the UAE, the margin is less than 20 per cent.

Differences in rates of inflation could also help to explain the lower supermarket prices in the UAE.

Dubai's annual inflation rate crept down to 0.2 per cent last month as food prices fell, while Abu Dhabi's inflation slowed to a 23-month low of 0.6 per cent last month. This compares with a UK consumer price index annual inflation of 4.8 per cent announced last week.

But it is not all good news for UAE consumers. Despite the generally lower prices, because the UAE has a diverse expatriate community, many products here are more expensive than elsewhere in the world.

"The only area you see pricing significantly above western supermarkets is for niche products that people require from their home country, or fresh produce," says Mr Wright. These products usually have to be flown in, which hugely increases the costs. "A crumpet is a mass product in the UK and doesn't cost a lot, but in the UAE it's very niche."