Introduction
Considering the persistent international economic pressures as well as the threat of inflationary tendencies increasing, the United Arab Emirates is working hard to prevent its domestic markets from being destabilized. The country has introduced a package of measures aimed at scrutiny of world market and inflationary expectations in order not to allow prices of goods and services within the country to be driven unjustifiably upwards. This is decision shows UAE’s will to ensure its citizens have stable purchasing ability and be economically strong regardless of the instability that is occurring in the surroundings.
UAE Inflation Control
According to a senior official, even though the UAE imports food, its inflation rate is lower than the global average.
The nation has a system in place to regulate prices, particularly for staple foods.
According to Abdullah Ahmed Al Saleh, undersecretary of the Ministry of Economy, the government monitors consumer goods prices worldwide and analyzes them locally to make sure that prices don’t rise against the trend and protect consumers.
Local vs. Global Inflation
“The local (UAE) rate of inflation is lower than the global rate. Over the past three years, local inflation has increased by 2.2% on average annually, whereas worldwide inflation, particularly for food goods, has risen by 5% to 6%, Al Saleh told Khaleej Times in an interview.
Given that the UAE imports a lot of food, he claimed that increased shipping costs, worldwide geopolitical unrest, and natural disasters all have an effect on local prices.
In order to ensure that there isn’t a local market upswing that contradicts the global price trend, he continued, “we keep an eye on all these increases in the international markets and compare the trend in the local market.”
Inflation Projections
The ‘World Economic Outlook‘ published in October by the International Monetary Fund projects that global headline inflation would average 5.8% in 2024 and 4.3% in 2025, following an average of 6.7% in 2023. In contrast, inflation in the United Arab Emirates is predicted to be 2.3% in 2024 and 2.1% in 2025. In 2023, the UAE’s consumer price index averaged 1.6%.
Speaking on the fringes of a press conference to unveil a new pricing strategy that was previously implemented to keep an eye on the costs of necessities for consumers, Abdullah Ahmed Al Saleh was making the announcement.
New Pricing Policy
The UAE’s new policy prohibits raising the cost of nine essential consumer commodities, which can only be done with prior Ministry approval: cooking oil, eggs, dairy, rice, sugar, chicken, legumes, bread, and wheat. On January 2, 2025, the new modifications are expected to go into effect.
The new Ministerial Decision No. 246 of 2024 on monitoring the prices of essential consumer goods, the Ministerial Decision No. 245 of 2024 regarding the unit price of certain consumer goods, and the Ministerial Decision No. 247 of 2024 concerning the Code of Conduct in the consumer goods sector were also explained by the under-secretary of the Ministry of Economy.
Cap on profit margin
Al Saleh went on to say that in order to preserve price stability in the local market, the ministry and the Higher Committee of Consumer Protection have the power to regulate the profit margins of the suppliers and retailers of these nine essential goods under the new ministerial regulations.
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Supply and Demand Dynamics
On the other hand, supply and demand determine how much other things cost.
In order to preserve price stability and an uninterrupted supply of essential consumer products, the United Arab Emirates and its businesses have been advocating for self-reliance in the supply of food and basic commodities as well as for the expansion of their source markets following the COVID-19 outbreak.
“The ministerial resolution also addresses the unit’s pricing for customer awareness and transparency. Customers should be aware of the precise unit cost of each commodity while purchasing these necessities. The third choice then has to do with best practices and guidelines. Ultimately, the goal is to guarantee that the relationships between suppliers and retailers do not affect the commodities’ pricing,” he continued.
According to UAE regulations, those who violate local laws risk having their businesses shut down and facing fines of up to Dh1 million.
Forming committees
Al Saleh clarified that inspection teams should be established in every emirate, along with information on how customers may file complaints with the Ministry of Economy and the local government, as well as information for vendors or traders who wish to raise prices in the local market.
“They should submit their application, along with all supporting documentation and proof that these commodities have increased.” The Higher Committee of Consumer Protection should receive the ministry’s conclusion after it reviews the application within 30 days, with a 15-day extension possible,” he continued.
