x Abu Dhabi, UAEWednesday 26 July 2017

Diverse basket of food

Lower food prices owe more to the free market than to price controls.

Food prices have been falling, The National reported yesterday.

That's a welcome change from the rising grocery bills we all faced around year-end, increases so severe that they prompted official action to keep prices under control.

Even though prices are lower now, there has been no indication that those price controls will be cancelled. Supermarket executives appear to have learnt to live with the freeze imposed on some 400 basic food and household products, to judge by the comments of some company spokesmen.

But it appears that the cap wasn't the only cause of lower prices: the UAE also increased competition in the marketplace by ending the requirement that retailers buy certain foodstuffs only through authorised middlemen. At a stroke, this gave consumers the benefit of more competition.

One grocery chain, for example, says it is now buying from three times as many suppliers as previously. The savings flow to consumers.

Fuel costs, harvest conditions in distant countries and other factors all cause food prices to fluctuate. But it is a striking lesson that in this case, less government control of the marketplace, rather than more, has been a boon to consumers.