Poor harvests, stockpiling and natural disasters mean prices of staple foods have yet to peak, says UN economist.
Alarm as the cost of food hits new high
ABU DHABI // Basic food staples have jumped in price in the past 18 months, and there are likely to be further increases this year.
Surveys by The National in April and July 2009 registered the price of basic items at three of the capital's main supermarkets: Carrefour, Lulu and the Abu Dhabi Co-operative Society.
Indian red onions in particular have soared in price since April 2009, reflecting a global trend: by 163 per cent at Carrefour, 130 per cent at the Co-op and 64 per cent at LuLu.
Locally grown cucumbers cost 46 per cent more than they did in April 2009 at Carrefour, and Dutch tomatoes cost 31 per cent more at LuLu. The Co-op's prices were the most stable. The price of a two-litre bottle of Lesieur cooking oil remained Dh22.50. Filipino bananas went up from Dh4.90 a kilo to Dh4.95.
The trend comes as a UN economist expressed alarm over global food prices, which reached a record high last month according to the latest data from the UN Food and Agriculture Organisation (FAO).
The FAO's food price index, which incorporates average prices of meat, dairy products, cereals, cooking oil, fats and sugar, was up 25 per cent from the same month in 2009. The index is now at 214.7, its highest since it was first calculated in 1990. During the 2007-2008 world food crisis, it reached 213.5.
Prices began to rise sharply in the second half of last year, owing to a variety of factors including poor harvests in Russia and Pakistan and stockpiling of crops by China and India.
There are now concerns that pressures on global stocks this year could be exacerbated by floods in Queensland, Australia, a leading exporter of wheat and livestock.
Abrolreza Abbassian, senior economist at the FAO, described the rising index as "alarming" and warned: "It would be foolish to assume this is the peak."
V Nanda Kumar, Lulu's head of corporate communications, said natural disasters around the world had affected food prices, both globally and locally.
"Last year, because of floods and bad weather conditions in many parts of the world, there was a lack of supplies that led to an increase in some food prices," he said.
Fruit and vegetable prices were particularly vulnerable, Mr Kumar said. Courgettes, for example, went up to Dh12 a kilo, and were now back at Dh4 or Dh5/kg.
"There was a lack of supplies despite a consistent demand, which drives prices up, but it was nothing alarming and nothing we expect to happen again any time soon," he said.
To prevent such shortages in future, Mr Kumar said, supermarkets such as Lulu planned to move towards buying directly from suppliers.
Georges Mojica, general manager of Abu Dhabi Co-op, said shoppers could see a ripple effect from rising market prices later this year.
"There is a lot of discussion with suppliers, definitely, and it seems like we're going to have some price increases in the coming months," he said. "For the moment it's pretty reasonable. Oil has gone up, sugar has gone up."
Consumers said yesterday they could not help but notice the increase in the cost of their groceries. "Every time I shop I am amazed at how much my bill totals up to be," said Sherine Ahmed, 33, from Morocco. She was shopping at Carrefour on Airport Road. "Everything has gone up, especially the vegetables."
At Lulu in Al Wahda Mall, Thasleem Brayn, 35, from India, also said the price of vegetables and fresh produce had increased most noticeably.
Ahilya Mahato, 24, from Nepal, has been living in Abu Dhabi for more than year. Throughout that time she had seen prices slowly rising. "It's in all items, mostly onions, tomatoes and cauliflower. I shop at other small groceries, but prices have increased everywhere and the difference isn't big."
Nothing has been exempt, she said - even fish, meat and toiletries.
Samir Mohammed, 42, a Syrian public relations officer in Abu Dhabi, said he shopped only at the Co-op and made the most of price promotions.
"The prices here are better than in other hypermarkets," he said, noting that certain food items such as sugar, rice and ghee had gone up in recent months.
For instance, one brand of pure ghee used to cost between Dh35 and Dh36 last year. Now, he said, it is Dh47.
"I've heard that prices of basic food items will increase by 50 per cent," he said. "People like me who have three teenage children are worried, but it will greatly affect those in the lower income group."
Jonar Mercado, 45, a Filipina who works as a family driver in the capital, said she bought groceries for her Emirati employer's family twice a week at Abu Dhabi Co-op.
The family, who spend an average of Dh1,000 a week, prefered to buy most food items in bulk and kept abreast of promotional items.
"The prices of frozen meat, fruits and vegetables are relatively lower at the Co-op," she said. "But the cost of Arabic flat bread here is Dh1.50 compared to Carrefour, which sells it for Dh1 only."
Azman Zulkifli, 38, a Malaysian oil technician in Abu Dhabi, said fruit was becoming unaffordable.
"I've noticed an increase in the prices of fruits like oranges, pineapple and water melons," he said, noting that most were imported.
The UAE is heavily dependent on imports - 85 per cent of its food comes from abroad, at an annual cost of Dh11bn. This makes it particularly prone to price fluctuation.
Bejoy Thomas, the director of marketing and new initiatives at the Abu Dhabi Co-op, said that despite the increased cost of imports, the Co-op would raise prices only with the Ministry of Economy's approval.
"We will be the last people to ever increase our prices, unless it is a global demand supply scenario approved by everybody and told to us by the Ministry of Economy."
With additional reporting by Jen Thomas, Ramona Ruiz, Armina Ligaya and Ola Salem
This article corrects an earlier version in which Bejoy Thomas, the director of marketing and new initiatives at the Abu Dhabi Co-op, was quoted as saying that despite the increased cost of imports, Lulu would raise prices only with the Ministry of Economy's approval. In fact Mr Thomas meant that the Co-op would raise prices only with the Ministry of Economy''s approval. The FAO's food price index in 2007-2008 has also been changed from 231.5 to 213.5.