Cost of weekly shop in UAE rises 10 per cent

A basket of nine branded goods, including Coca-Cola, Nescafé instant coffee and Lurpak butter, is now more expensive at three local hypermarkets. Sarah Dea / The National

The cost of a weekly shop has risen since the start of the year, in spite of government controls designed to curb inflation.

Analysis by The National shows that the price of some branded goods on sale in the UAE increased by as much as 10 per cent since the start of the year.

A can of Heinz Baked Beans rose by 40 fils to Dh4.30 (US$1.17) at Carrefour and by 25 fils to Dh4.50 at LuLu in the period.

A basket of nine branded goods, including Coca-Cola, Nescafé instant coffee and Lurpak butter, is now more expensive at three local hypermarkets.

Products at Carrefour, which is the cheapest for the nine branded goods analysed, rose by Dh1, while at Géant they increased by more than Dh8. At LuLu, the second most affordable hypermarket in the category, the price of the basket increased by 35 fils. All three hypermarkets were also more expensive for a basket of staples such as rice, pasta and potatoes.

LuLu, the cheapest in the category, imposed the smallest price rise of Dh3.20, while Carrefour, the most expensive, also had the largest increase at Dh 9.30.

"We see the market going up but we try to keep our prices low," said V Nandakumar, a spokesman for LuLu Hypermarket. LuLu had imposed a strict policy surrounding price increases on essential products, he said.

"For example if a supplier wants to increase the price of rice we have a very simple policy, get it approved by the Ministry of Economy and come back to us," said Mr Nandakumar.

The ministry earlier this year launched an online monitoring system to track the prices of 200 goods on a weekly basis at major supermarkets and hypermarkets. In June, it was announced that the prices of 1,600 food staples were to be frozen until the end of the year.

However, Simon Williams, the chief economist at HSBC, warned that price controls usually only offer temporary relief.

"They are essentially pretty ineffective over any period of time," he said. "As economic growth accelerates you will see that express a larger pressure on a range of prices, including that of foodstuffs," he added.

Yet some supermarkets have been implementing measures to keep the costs of their products down longer term.

LuLu has over the past four years started importing its products directly to cut out the middleman, said Mr Nandakumar.

"We have established our offices across Europe, the Far East, China, African countries, the Indian subcontinent. We are opening our London office at the year end to source from that region."