Retailers urged to slash prices

DUBAI // Ministry of Economy officals have asked retail giants to cut the prices of staple foods and some goods, and at least one - LuLu Hypermarket - has promised to do so by the end of the year. The director of the consumer protection department, Dr Hashim al Nuaimi, held a meeting on Thursday with representatives from a dozen leading retailers including Carrefour, LuLu and Al Manama Hypermarkets and Supermarkets, asking them to slash prices. The head of the LuLu chain yesterday said retailers agreed to co-operate with the Government and shoppers could expect to see "sizeable reductions" in the price of key foodstuffs by the end of the year. Saifee Rupawala, chief executive of Emke Group, which owns the LuLu Hypermarket chain, said: "As a result of the meeting we had with Dr Nuaimi we are in negotiations with our local and international suppliers and manufacturers to find out ways and means of bringing down prices. "If everything goes to plan and the world economic situation stabilises a little more, by the end of next month consumers will be able to see some concrete changes." The ministry's move comes after consumer prices began to increase at the beginning of the summer against a backdrop of rising inflation. Runaway prices appeared to stabilise in September, according to a survey carried out by The National last month. Dr Nuaimi asked retailers to explain how wholesale costs of foodstuffs and raw materials could have fallen in recent weeks without reductions being passed on to shoppers, according to a report by the official news agency WAM. Retail chiefs argued the cost for goods on store shelves remained high despite declining global prices because products had been bought several months earlier at high prices. As new stock came in, the cost to consumers would be reduced, they said. Yesterday, the Ministry of Economy said: "The meeting discussed the impact of decline in prices of exported products, and explored reasons on why the reduction is not reflected in prices locally. "The outlet representatives predicted that prices of a number of food items will drop in the coming months due to decline in production costs in local and regional markets and the appreciation of the dollar." A source close to the meeting, who spoke on condition of anonymity, said part of the reason cost reductions had not already been felt by consumers was that wholesalers and importers had failed to pass on falling prices. "On their own, retailers do not control prices," he said. "It is more like they simply pass on the high and low costs and prices from wholesalers." Shoppers on the streets of Abu Dhabi were delighted to hear news that food prices could be cut as early as December. Anj Toor, 35, from England, who has been in Abu Dhabi for three weeks, said she found prices equivalent to those in the UK. "I don't find the difference in my pocket at all," she said. "From what I understood from talking to my friends, the UAE is supposed to be cheaper, but I'm not finding that at all." Naved Salam, 39, from India, who works as a sales manager in the oil and gas sector, said: "I haven't really noticed any prices going down. "I think they have gone up considerably in the past, but prices going up is mostly the result of high rent prices - the stores will have to factor in the prices of the products, so I think that unless rents are controlled, I just see this as a temporary fix." Damon Lalich, 35, from Australia, who works as education adviser in Abu Dhabi, said: "I think it's been steady over the last year, but my friends tell me [prices are] constantly going up." Earlier this year several major retailers, including Carrefour and LuLu, signed agreements with the Government pledging to cap prices until the end of this year at 2007 levels. chamilton@thenational.ae mkwong@thenational.ae