ABU DHABI // A member of the Federal National Council yesterday urged the Government to help tame soaring inflation by capping basic commodities and property prices. "Inflation will keep rising if the Government does not interfere," said Hamad al Madfaa, an FNC member from Sharjah. "Free market does not mean chaos or lack of rules. The basic commodity prices and rents should be controlled."
Mr Madfaa went on: "What we are saying is that hikes in prices are normal. But a government regulation is the basis for preventing unreasonable increases. Some in the private sector are deliberately increasing the prices." His remarks came as Merrill Lynch, the US investment bank, said inflation had hit 13 per cent in the first six months of the year as a result of steadily rising house prices and food costs.
However, Merrill Lynch said inflation might not be as high in the second half of the year, when it projected the economy would begin to cool down. In 2007 inflation hit a 20-year high, reaching 11.1 per cent. Mr Madfaa made his comments while attending a workshop organised by the FNC's financial, economic and industrial committee to discuss inflation with representatives from the private sector.
The workshop was part of a series of meetings the committee is holding before drafting its final report on measures to control rising prices. FNC members are hoping to debate the issue during the first meeting of the coming session, scheduled for Nov 21. Yesterday's workshop was an attempt to pin down the main causes of inflation from the private sector's point of view. The business representatives and FNC members argued that high electricity and fuel prices were helping to cause it. Mr Madfaa said: "Some of the reasons that led to inflation are the rising energy prices, whether electricity or diesel, which have led to increasing the production costs. "There are many things that could lead to alleviating inflation, everyone is affected. The way to decrease it is through co-operation among all concerned parties." The committee members are expected to meet with government officials from several ministries, including the Ministry of Economy. Ahmad Saif Balhasa, chairman of the Contractors Society, said the increasing production costs in cement factories were eventually leading to more hikes in the property prices. Other business experts at the meeting said cement was only one example and that everything, from steel to tiles, was expensive. "We tried to convince some developers to carry out some of the multibillion projects over five years instead of two [years] so the construction would cost less and the quality would be better," said Mr Balhasa, adding that it was the high demand and short supply of raw material causing the major hikes in construction costs. Mr Balhasa and others urged the Government to subsidise electricity and diesel, arguing that other GCC countries, including Saudi Arabia, were already doing that. mhabboush@thenational.ae