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Dubai: The UAE Government's attempt to control the prices of essential goods by setting maximum retail prices could seriously affect the supply and quality of goods in the market, retailers warned on Saturday.
Leading food retailers in the country are expected to meet ministry officials this week.
The Ministry of Economy has issued a circular to retailers, a copy of which Gulf News has obtained, directing retailers nationwide to stay within the maximum retail price (MRP) bands prescribed by the ministry.
The circular sets maximum retail prices for commodities such as eggs, basmati rice, chicken and drinking water.
The setting of prices of these commodities above the MRP will result in a fine of Dh10,000, and hoarding will bring a fine of Dh20,000.
A cross-section of consumers in Dubai welcomed the move and said the MRP should be extended to all essential commodities. "Everything from red meat to detergent and bread has gone up in price. There should be a maximum price for those too," said Zaima Mustafa, an Omani national.
Many retailers, however, said the setting of prices on essential commodities would affect their supply and quality.
"The increasing prices of essential goods have been directly linked to increased production costs. Our suppliers are not willing to reduce prices," said Ashraf Ali M.A., executive director of Lulu Group.
Smaller supermarkets said if the MRP is strictly enforced they will not be able to stock most of the items.
According to Merrill Lynch, the exchange peg has become the main source of inflation. "Pegs to the sliding dollar not only import inflation and fuel domestic liquidity but also import easing monetary policy," said Turker Hamzaoglu, EMEA Macro and FI Strategist of Merrill Lynch.
Ministry of Economy issues circular to retailers on MRP on essential goods. Retailers say price fixing can lead to severe shortages of food items and quality problems.
Do you welcome the move? How will it impact the consumers?
Your comments
Kudos to the Ministry of Economics. They're just doing their job to protect the consumers against unscrupulous retailers. Most of the retailers were taking advantage of the situation so as to gain more profit at the expense of the hapless consumers.
Roberto
Dubai,Philippines
Posted: March 09, 2008, 10:56
The measure taken by the Ministry of Economy will be welcome by consumers but retailers will be forced to pay the full bill. It is just another measure by the government to reduce the pressure on its policy of keeping the peg to the dollar. Sorry retailers, but the money will have to come from your pockets this time....who should be next?
Guillermo
Dubai,UAE
Posted: March 09, 2008, 10:25
Every supermarket set different price for the same product. We would request the ministry to set the same margin for same product in all the supermarkets.
Roshin
Dubai,UAE
Posted: March 09, 2008, 10:24
Fixing prices is not the solution. While this is good for consumers, the retailers' margins are getting squeezed from both ends i.e. price ceilings and rising costs (due to the $). This will obviously lead them to not supplying these commodities. The ministry should look to provide subsidies to retailers of these commodities. The retailers are part of the same economy as the consumers, the ministry should look for a mutually benficial solution.
Anand
Dubai,UAE
Posted: March 09, 2008, 10:23
Inflation is because of market forces i.e. Demand and Supply, cannot be regulated by imposing fines on retailers.
Danish
Karachi,Pakistan
Posted: March 09, 2008, 10:23
Well....there are many countries where the MRP is made mandatory for all the products and of course that does not affect the quality or supply of the commodities. Introducing MRP will bring a control over the unjustified pricing by the retailers. Retailers' negative response to this decision is obvious and it shows how they are manipulating the market under the cover of global inflation.
Shabab
Abu Dhabi,UAE
Posted: March 09, 2008, 10:13
The only quick solution to this problem is that the government should subsidize basic foods, instead of forcing retailers to lower prices which will definitely reduce supply and quality.
Abdullah
Abu Dhabi,UAE
Posted: March 09, 2008, 09:56
MRP condition will not solve the problem as this is not the issue or the root cause. What will the Ministries do about the rising rentals as this attributes the larger chunk of the cost of sales at most of the places. Apart from this the basic reason for all this is "Dollar Peg" which government is not willing to let go, unless GCC currencies are revalued to their actual values there will be more challanges coming up, specially for the consumers and residents.
Muhammad
Ajman,Pakistan
Posted: March 09, 2008, 09:48
Unplanned, unvisionary real estate boom made several innocents homeless in the name of maintenence.
If rents increased by 200% to 400% how will the business of commodity survive. How long can subsidy save you?
bharti
dubai,uae
Posted: March 09, 2008, 09:26
It is no doubt a long awaited move by the Ministry of Economy. We have to admit that inflation is looming around but to bring a 100 % increase in prices at one shot is too much, and open doors widely for greed issues.
Ala
Ajman,U.A.E
Posted: March 09, 2008, 09:18
We are not satisfied with this price list because we are a middle class family and our salary is also very low.
khaja
chennai,india
Posted: March 09, 2008, 08:58
Too little, too late.
Srdjan
Abu Dhabi,UAE
Posted: March 09, 2008, 08:30
Its a good decision, and its already implemented in india before 20 years and we are all getting a currect knowledge about the price of all goods.
And also there is a way to reduce the cost. The government should open some hypermarket like union co-op and sell the goods with reduced prices.
shajahan
dxb,uae
Posted: March 09, 2008, 07:50
Government stepping in soaring prices issues is a need of time; welfare of citizens are partially fixed by compensating them with raises but private work force were left unattended, who contribute in building economy of the nation too. Many countries help by paying the differences in general commodities such as food, rentals and fuel, requesting our kind rulers to intervene and resolve this humanitarian's economic crisis.
Kamran
DUBAI,UAE
Posted: March 09, 2008, 07:39
It will be a very good step if it will be applicable, which I don't think will be, as per past history. If the ministry will take strict action may be it is possible which will give relief to the customers: a big favour from ministry as poor people are suffering a lot and are unable to meet their daily expenses.
Khalid
Dubai,UAE
Posted: March 09, 2008, 07:16
A nominal hike in prices is essential but they cannot justify it by increasing 50% or 75%. AED should be depegged immediately and stay floating or if necessary, be pegged with Euro. Or AED should be appreciated keeping pegged with dollar to 3.00 or near to this in order to control inflation. Retailers should be asked to reduce their prices when Oil and others commodities go down in international market.
Please send my suggestion to Ministry of Economy.
Mohammad
dubai,u.a.e.
Posted: March 09, 2008, 07:13
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