New checks to curb Ramadan price rises

Food-price inspectors begin checks today to ensure that retailers do not cash in on increased demand before Holy Month.

A consumer watchdog warns that stores may reduce the price of staples, but raise prices on other items. Others may seek to use transport costs to justify increases.

ABU DHABI // Food-price inspectors begin checks today on supermarkets and the Mina vegetable market to prevent price rises in the weeks before Ramadan. Demand increases at this time of year as many Muslim families stock up before welcoming relatives to iftar meals, and others buy large quantities of food to distribute at mosques and to the poor.

Last year the cost of some items rose by more than 17 per cent in August. In the first seven days of Ramadan there was a rise of 1.5 per cent in the cost of bread and cereals, 0.4 per cent in fruit juices and 1.5 per cent in sugar, jam, honey, chocolate and confectionery, according to the Statistics Centre-Abu Dhabi. But in the whole of August, the price of fish and other seafood increased by 5.2 per cent, pulses and dry grains were up by more than 17 per cent and sugar, jam, honey, chocolate and confectionery by almost 16 per cent.

Inspectors from the Abu Dhabi Department of Economic Development (DED) will begin checks today in a plan to ensure that popular goods are available during the Holy Month and there are no unjustified increases in the price of consumer products. "The ministry has adopted a mechanism to implement the plan through regular talks with the main suppliers of products, strict monitoring of outlets and encouraging suppliers to import products directly to get better prices," said Sultan bin Saeed al Mansouri, the Minister of Economy.

Mahmoud al Baloushi, head of consumer protection at the DED, said: "We've already met suppliers to ensure that we can provide all the products that are valuable to Ramadan celebrations." The Department of Economic Development in Dubai has also begun field visits to food outlets and the fruit and vegetable market in the emirate to check market prices. In Dubai, the Ramadan food basket typically provided by major outlets will be optional because of a lack of interest in recent years.

The DED in Dubai offers a toll-free number for concerned consumers to learn more about their rights, and is conducting an awareness campaigns among retailers. Since 2006 the Ministry of Economy has helped to compile a low-cost basket of staples such as flour, milk, oil, rice, sugar, dates and water. Mr al Baloushi said the basket would probably cost Dh150-Dh200 this year. However, not all supermarkets will carry the basket. Abela Supermarket's retail administrator said the store already reduces prices on almost 95 per cent of food staples for Ramadan.

"We buy products locally, so unless products go up by suppliers we don't need to raise prices," said Hady Ishak. "In Ramadan, it's the lowest margins even on items available regularly." Other supermarket chains, such as Al Maya group, promised to offer promotional deals or maintain its pre-Ramadan prices, according to Kamal Vachani, the group's director. One supervisor at a branch of Abu Dhabi Co-op said no suppliers had notified them of an increase in their costs. He said prices did not usually increase in Ramadan, despite the rise in demand.

Officials also intend to keep shoppers up to date on what they should expect to pay and offer brochures with shopping and food safety tips, such as avoiding the storage of large amounts of meat during Ramadan. In an added complication this year, Abu Dhabi National Oil Company has raised the price of diesel fuel, which is used by delivery lorries, twice in three months. Mr al Baloushi said the DED had not received any complaints about food price increases as a result of the rise in the price of fuel.

Sven Mostegl, a food consultant based in the capital, said that while food suppliers might say that increased fuel prices are affecting them, his calculations show that transport costs are likely to increase companies' total costs by only two to three percent. Nevertheless, the food supply relies heavily on transport. "Everything here is transported not twice, but up to five times," Mr Mostegl said. "Raw materials from one place to another place, importing from the ship then the truck transportation then the factory then preparing the finished product and then the last step is the consumer's transport to home."

Juma Fairouz, head of the independent UAE Consumer Protection Society based in Sharjah, said price checking should not be restricted to Ramadan. "Isn't the human being in Ramadan still the same person after Ramadan?" he said. "Why in Ramadan do we pressure the Co-ops or food outlets to bring the price down and forget the rest of the year?" Mr Fairouz, who supports controlling prices, said any reduction in the cost of food staples would probably come at the expense of other non-essential items that are likely to rise in price. He argued that consumers would concentrate on a reduction in the price of a staple such as rice, while overlooking a corresponding increase in the price of cooking oil.

While the fuel price rise was significant, he said it was acceptable for retailers to make lower margins in the middle of an economic downturn in which consumers have given up significant portions of their income. "All items in the UAE get transported from one place to another on vehicles," Mr Fairouz said. "If the co-op before the increase had a 10 per cent profit margin, and after it the margin is 8 or 7 percent, that's fine."

Mr Fairouz said consumers should record the prices of goods they buy before and during Ramadan to monitor any fluctuations in price. [e-mail] [e-mail]