Text size:

  • Small
  • Normal
  • Large

Price caps on food have limited effect

That sharp increase in the price of some groceries can be blamed in part on price controls for certain other foodstuffs.

When an unstoppable force crashes into an immovable object, the price of meat goes up. That's the lesson decisionmakers - including the one who makes your household's dinner policy - can draw from yesterday's news on rising food prices in the capital.

The figures, published by the Statistics Centre Abu Dhabi, will merely confirm what anyone who shops regularly for groceries has seen this year: while food prices across the board were a little higher in January and February than a year ago, prices for meat are up a sharp 12.3 per cent, and coffee, tea and cocoa climbed 8.4 per cent.

The unstoppable force behind this bad news is the global law of supply and demand. The immovable object is the food-price control policy that keeps the cost of 400 basic food and food-related products in the UAE stable and relatively low.

So in this country, retail prices do not budge even when wholesale costs climb. This is not magic: grocers, who are in business to earn a profit, make up the loss by boosting prices on those meat products and processed foods that are not included in the price-control policy.

In practice, then, price controls transfer some wealth from those who buy lamb chops to those who can afford little more than lentils and rice.

Supply-and-demand often works for ordinary people. Many of us take our groceries home to housing that costs less than it used to, because oversupply has depressed prices. And despite the market distortion caused by controls, the UAE's National Bureau of Statistics says food prices in January actually declined a little nationwide from the previous month. Supply-and-demand works both ways.

Overall, these are not inflationary times in the UAE. Abu Dhabi's consumer price index was a mere 0.7 per cent higher last month than a year previously. Statistics agencies calculate "the CPI" based on a basket of "typical" goods and services. Your own CPI change depends on what you buy: the biggest single factor in that 0.7 per cent rise, for example, was "restaurants and hotels" -stay out of them, and life gets cheaper.

Food-price changes cause more anxiety than many other economic indicators, but it is helpful to keep some perspective. Much of the world envies the UAE its stable supply, rich variety of choice, and moderate prices.

Back to the top

More articles


Editor's Picks

 A supporter of India’s ruling Congress Party wears a mask of leader Rahul Gandhi during a rally in Mumbai, India. Kevin Frayer / Getty

Best photography from around the world, April 21

The National View's photo editors pick the best images of the day from around the world.

 Bloom Properties' Al Bateen Waterfront project in Abu Dhabi. Photo courtesy Bloom Properties

Bloom Properties starts work on Al Bateen Waterfront project

The development will feature 225 residential apartments of one to four bedrooms, a 200-room five-star hotel with 57 serviced apartments, and a 3,000 square metre retail space

 David Moyes has led Manchester United to seventh in the Premier League, six points behind sixth-placed Tottenham. Alex Livesey / Getty Images

Manchester United require ‘radical surgery’ from top to bottom

'Moyes is not a bad manager ... However, he is doing a spectacularly bad job at United' writes Richard Jolly of Manchester United, arguing wholesale changes at the club are now necessary.

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Jia Ruhan sang as a guest singer in famous pianist Robert Wells's concert 'rockabilly-medley' in November 2012. Handout

Meet the pop star who is key to China’s superpower ambitions

Before Beijing can achieve its ambitions to be a superpower it will need to become a respected soft power. That's where Jia Ruhan comes in.

 Screen shot from Vin Deisel's facebook page of he and Michelle Rodriguez in Abu Dhabi for the filming of Fast & Furious 7. April 2014

Fast & Furious in Abu Dhabi, a social media frenzy

Fast & Furious 7 wraps up an eventful and much-anticipated week of filming in the capital. Let's take a look at what went on via the key players' social media, while they were enjoying the delights of the desert.

Events

To add your event to The National listings, click here

Get the most from The National