Many more checks on prices in bid to head off inflation

More than three times as many supermarkets now monitored, with checks on 650 household shopping items.

Checks on food prices have been stepped up to keep them under control as inflationary pressures return. Officials have more than trebled the number of supermarkets they monitor to 40 while the basket of household goods that is tracked by the Ministry of Economy has been increased from 250 items to 650.

"We are covering more than 90 per cent of major retailers in the country to try to reduce prices for consumers," said Dr Hashim al Naimi, the director of the consumer protection department of the Ministry of Economy. The decision by officials to expand their efforts to keep a lid on prices comes as fears grow inflation may return to haunt Gulf economies following government stimulus measures aimed at stoking growth.

The surging cost of basic foodstuffs such as sugar has already led to warnings that the price of many drinks and sweets may rise this year. Noureldin and Maryam Garnata, a couple from Algeria, said they had already noticed the price of basic goods creeping up. Yesterday, they were doing their weekly shopping in Carrefour on Airport Road in Abu Dhabi. "We have had to adjust our diet to the change in prices," said Mr Garnata, an oil engineer, "I wonder how families of six or eight would be holding up?"

Khaled Abd al Atheem said the weekly food budget of Dh600 (US$163.35) for his wife and four children was now insufficient. "Food takes a significant portion of my budget, and my salary is still the same," said Mr al Atheem, an accountant from Egypt. "It's not just one particular food item that has gone up, it's across all foods." In an effort to keep the lid on food prices in the UAE and ensure sufficient supply, the prices of staples such as milk, sugar and bread have traditionally been monitored by the Ministry of Economy through inspection teams.

At the height of inflation in the country in 2008, the Government struck a deal with several major retailers, including Carrefour and LuLu, to cap prices until the end of the year at 2007 levels. "We welcome this initiative by the Government to boost consumer confidence," said a spokesman for LuLu. "We are already following the Ministry of Economy's guidelines of pricing of our products." The results of the monitoring will be recorded and published weekly on the ministry's website and in the media.

A traffic-light colour code system will help consumers to identify if prices have stayed the same, gone down or risen compared with the previous week. Fines will be handed out to supermarkets that increase their prices beyond levels officials consider "reasonable". Inflation, rising prices for goods and services, could be a damaging side effect of a recovery from the global financial crisis, economists warn. Rising inflation can reduce the value of money, while concerns about future inflation can discourage foreign investment and consumer saving.

The UAE was beset with double-digit inflation before the financial crisis hit, with higher food and housing prices, together with surging oil prices dispersing wealth across the GCC. A decline in oil markets and falling property values since last year helped relieve inflationary pressures across the region. The inflation rate in Abu Dhabi was 0.78 per cent last year, while in Dubai it was 4.06 per cent, government data showed. In a sign that these pressures could be starting to return to the UAE, data for November 2009, the latest monthly figures available, show consumer prices posted a slight gain, after four straight monthly falls.

Elsewhere in the region, rising demand for housing in Saudi Arabia is keeping inflation rates in the region's biggest economy at four times historic averages, despite the global economic uncertainty.