ABU DHABI // Global inflationary pressures are likely to worsen the advance of price rises here, a senior Government official said yesterday. Mohammed Ahmed bin Abdulaziz, the undersecretary for the Ministry of Economy, said that taming double-digit inflation would depend on the direction of food and petroleum prices in international markets. "Globally, the trend doesn't look promising," he added.
Mr Abdulaziz targeted foreign rice importers who hoped the Government would back down from price caps that it had imposed on the grain. He said if they stayed away from the UAE market, they would be replaced by other suppliers. "Arm-twisting does not work, there are many other channels to get rice," he said. To ease the burden of rising food prices, the Government has asked the country's top retailers to freeze prices on basic food commodities for the remainder of this year, and introduced price caps on rice to Dh145 (US$39) per 39kg bag.
The ceiling price on rice, however, has resulted in at least one supplier of premium Pakistani brands leaving the UAE market altogether. Sinnara, one of the country's more popular brands of foodstuffs, has not been on the country's shop shelves for months; other brands have also disappeared. Petroleum prices hit a new high when oil reached more than $146 a barrel yesterday. Record energy costs have been blamed for the rise in global inflation.
But while Mr Abdulaziz acknowledged that inflation in the UAE was affected by global trends, he said rising rental costs were the country's leading cause of inflation last year. Increased rental costs accounted for almost 60 per cent in the rise of inflation to more than 11 per cent, from about nine per cent in 2006. Economists believe that rental prices will begin to stabilise in the middle of next year, when many major construction projects are completed and begin to satisfy the pressing demand for accommodation.