Shoppers hoping for lower prices

Consumers and experts gave a cautious welcome to Government plans of liberalising the trade of certain food commodities.

ABU DHABI // Shoppers hope the Government's plan to deregulate the market in staple foods will lead to lower prices.

But they are not counting their chickens before they are hatched, and for now there are as many questions as there are answers.

The federal move will end import monopolies on more than 12 essential commodities including honey, eggs, fruit juices, salt, yeast, animal feed, detergents and hygiene products.

That should create competition between importers and perhaps lead to lower prices.

"If this means that I will be paying less for these items, then that would be a very good thing," said Sheryl Owen, a British housewife and mother of two who spends more than Dh1,500 a week on groceries.

"But to be honest the impact, I think, will be limited because the list doesn't include everything. It's not as if you're going to be buying a jar of honey every week."

Sultan Al Mansouri, the Minister of Economy, said the objective was to contribute to market stability and increase the rights of consumers.Mr Al Mansouri said dealing with the rising prices of essential commodities was a ministry priority and curbing monopoly pricing was a part of it.

The measures will mean more to people on lower incomes, surmised Peter Minchin, a Canadian resident.

"I've been in Dubai for about seven years now and the general cost of living is pretty high," Mr Minchin said.

"I know they have done these price setting [systems] before and it does help people, but I think for [those] who are earning decent money here the difference is negligible," Mr Minchin added.

Rakesh Gupta, an Indian national, said the key could be which brands were affected.

"If this will apply to all of the items and brands that would make a big difference, but if it's only going to be a few supermarket-branded items then I don't think it will be that good," Mr Gupta said.

"People like to buy a particular brand and they will tend to buy it even if there are others that are cheaper."

Last week, the ministry announced plans to increase the number of lines in its price-monitoring scheme to more than 1,000 from 650 by the end of this year.

Meanwhile, it is hoping the move to liberalise the trade of more products will significantly lower prices at supermarkets across the country.

"It's a very good move because prices will definitely go down now that the trade has been liberalised," said Dr Hashim Al Nuaimi, the head of consumer protection at the ministry.

Dr Al Nuaimi said the increased competition would force local merchants to drop their prices and any food outlet in the UAE should accept new imports.

Supermarkets also embraced the move.

"Carrefour and Majid Al Futtaim Hypermarkets welcome government measures to encourage families to make the most of their household incomes," said Henry Changeux, Carrefour's GCC country head.

"We will work with our suppliers to ensure [our] prices are kept as low as possible."

Two economists said the changes should benefit consumers to some degree.

Dr Giyas Gokkent, the chief economist at the National Bank of Abu Dhabi, thinks the move would reduce prices.

"If the price controls are still there, there will be a price impact," Mr Gokkent said. "They want to encourage more competition, so if you have a greater number of suppliers it will mean more competitive prices."

While Simon Williams, chief Middle East economist at HSBC, doubted the effect would be significant, he said: "Any increase in competition is positive in an economy that is heavily regulated.

"I can't gauge what immediate impact this will have but in my view, the increase in competition is positive."

* With additional reporting by Nadeem Hanif