The Ministry of Economy and Tourism sits at the centre of an oversight effort now covering 8,343 products across 525 shops, as UAE regulators move to hold food prices steady while the war in Iran disrupts supply chains across the region.
The conflict began on February 28. Its effects have been widespread: the effective closure of the Strait of Hormuz, where commercial ships have been attacked by Iran, has hit supply chains and pushed up the cost of food, transport, insurance and energy around the world. The UN Trade and Development agency has previously warned that higher energy, freight and insurance costs linked to the disruption could increase food costs and put pressure on household budgets.
The government’s response came in April. It launched the Essential Goods Prices Platform, overseen by the ministry, to monitor price changes on those 8,343 products at 525 shops operated by 13 major retailers. The tool was expanded in August after recording 143,000 visits in its first four months. Officials acted to protect customers from unjustified price increases after a surge in demand for essentials in the early weeks of the war, and the ministry carried out more than 7,000 inspections of retailers in the two weeks after the conflict broke out.
At the time, the ministry said it was intensifying monitoring efforts to ensure price stability, particularly for nine essential goods: cooking oil, eggs, dairy products, rice, sugar, poultry, legumes, bread and wheat. Under the rules now in force, the price of those items cannot be raised without approval from the ministry and a national committee set up to assess food costs.
Retailers, for their part, say they are working within that framework. Shamim Sainulabdeen, director of private labels at Lulu Group International, which operates more than 100 outlets in the UAE, said the retailer would follow government guidelines and refrain from increasing the price of staples, commodities and essential goods. “We are a responsible retailer, so we are absorbing some costs. The government insists on keeping the price stable for our fast-moving staples,” he said. The supermarket company has also chartered vessels to speed up deliveries, instead of having orders shipped with those of other companies.
Producers describe similar contingency planning. Tareq Al Hosani, chairman of Al Ain Farms Group, said the company had plans in place before the war broke out. They included using Fujairah port, working with suppliers and contacts in Saudi Arabia and other neighbouring countries, and using air freight. Strategic reserves of feed and other supplies provided a further buffer for production. “We always had a plan B, plan C and a plan D to continue to be able to serve our market,” he said.
Mr Al Hosani said the company had taken on additional costs to minimise the impact on the public, and that customer loyalty and growth in sales helped it maintain profitability while limiting price changes. “We are trying to swallow as much as we can from that cost variation and we are trying to put the minimum on the clients because you know this is only a transition,” he said. “It’s only a short period and we owe it to our clients who put their trust in us.”
Meanwhile, the pressure on households is visible in official data. The Dubai Statistic Centre’s latest consumer price index showed food inflation rose to 8.05 per cent in September, up from 7.39 per cent a month earlier. A study by consultancy Redseer this year found that 78 per cent of respondents in the UAE noted higher grocery prices, while 51 per cent identified food inflation as their main concern.
Nagham Hassan, a Middle East market analyst for investment platform etoro, said the conflict had accelerated the rate of global inflation. She said people were favouring more affordable options as they reduce discretionary spending. “Both Lulu and Spinney’s stated that private label sales increased, and usually private label is a more economic option than the other brands that are out there,” she said. More people are making trips to supermarkets, but are spending less each time, she added.
For now, the combination of ministry oversight, approval requirements for essential goods and retailer commitments to absorb costs forms the framework holding prices in check. How long that framework can hold as the disruption continues remains the open question.