'Price caps will be hard to enforce'

Violations of ceiling agreement continue. Retailers say Ramadan will test Government's ability to set limits.

Shoppers at the Fruit & Vegetable market in Dubai yesterday.

DUBAI // With Ramadan just days away, retailers are sceptical the Government will be able to enforce price caps on basic food items. There have already been frequent violations to the so-called ceiling agreements signed in recent months, say several retailers, who believe it is beyond the Government's ability to do anything about it.

"Some places do maintain their prices, like Choithram and Lulu, because they know customers will keep coming every day, but others are raising prices because they are afraid of losing money," said Kishore Ghaudhani, the owner of a small restaurant near Al Awir. Punit Shrespha, the owner of the Shanghai Chinese Restaurant in Bur Dubai, said price breaks during Ramadan would ease a massive burden. "Of course, I think everyone is hoping for prices to decrease since living expenses have become so high in Dubai, but I find it hard to imagine that the Government can really keep everyone from raising their prices," he said. "The retailers have to make a living too."

This week, the Government has taken its message door-to-door, urging retailers not to increase the burden on consumers. Yesterday, officials from the Emirates Society for Consumer Protection, a division of the Ministry of Economy, visited three major supermarkets in Dubai to get feedback from retailers and vendors about the measures. On Tuesday, the delegation toured the capital, also urging co-operation.

"Our primary goal in this trip is to make an updated assessment on prices in the market and observe whether there is any type of false price gouging currently taking place," said Dr Hisham Saeed al Nuaimi, the society's director. "The case now is that there are market prices and we would like to make sure that those market prices are maintained," said Dr Nuaimi, "at least through the month of Ramadan so to assist the people".

Earlier this year, the Government signed agreements with various domestic retailers, including Baniyas Co-operative Society, Carrefour, Union Co-operative Society and Lulu Hypermarkets, for price caps on items such as chicken, rice, flour and eggs to combat rising prices set by suppliers. Last April, the Government announced it was stockpiling more than a dozen "essential" food items to protect against food shortages that often follow price caps.

One month later, officials with the Ministry of Economy announced that 15 items - including dry and condensed milk, frozen and canned vegetables, baby food, chicken, edible oil, rice, flour, fish, meat and tea - were to be placed on a free import list to contain inflation. Due to limited water and agricultural land, countries in the GCC are forced to rely heavily on imported food items. The UAE imports almost 85 per cent of its food.

In recent months higher oil prices have manifested themselves locally in the form of higher commodities prices, a burden which is then passed on to consumers. According to the latest price index released Tuesday, a one-kilogram bag of Indian dry onions cost Dh1.55 (US$0.42) at Carrefour, up from Dh1.45 in April. At Lulu hypermarkets in Abu Dhabi the same product cost Dh1.65, up from Dh0.60 in April. One kilogram of Jordanian tomatoes was Dh2.40 at the Abu Dhabi Co-operative Society, up from Dh1.95 in April.

The Federal Government reported a 10.7 per cent jump in inflation last year driven by higher rents, transport and food costs. According to the Emirates Society for Consumer Protection, food inflation could rise as high as 40 per cent this year. He said several supermarkets in Dubai and Abu Dhabi had already been caught violating the price cap agreements. While he would not name those retailers, he did say the Government will remain vigilant about prices throughout Ramadan.

He added that flouting the designated price caps would bring consequences, including verbal warnings, fines from Dh1,000 to Dh10,000 and possible legal action. But Mr Ghaudhani, the owner of Al Awir restaurant, did not see those as a deterrent. "The government people come today and see one price," he said. "Next week there will be a new price - will they be back here to check?" Vendors at the Union Co-operative Society's Fruit and Vegetable Market such as Massoud Boulos added that the higher prices may be worth the risk.

"Everyone here is just trying to survive," he said. "You would be surprised what a difference it makes to raise prices by just Dh2." @Email:[e-mail]