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Abu Dhabi: Food retailers in the UAE are blaming producers and suppliers for pressuring them to increase prices even as the government seeks to firmly control inflationary trends, officials and experts said yesterday.
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"Even though there is pressure for price hikes, we did not change anything, as we need to compete with other retailers," Ebrahim Al Bahr, assistant general manager of Union Co-operative Society in Dubai, told Gulf News.
"If there is any pressure to increase the prices, it only comes from producers and suppliers."
Recent reports predicted that the UAE's rate of inflation is likely to increase this year. The latest was a Standard Chartered Bank report which revised the rate to 9.3 per cent from its earlier estimate of 7.3 per cent.
The rise in food prices cannot be ruled out as a reason for the increased inflationary pressure, say experts.
Hashim Al Nuaimi, director of the Consumer Protection Unit at the Ministry of Economy, held a joint meeting last Sunday in Dubai with representatives of Dubai's Department of Economic Development and Dubai Municipality.
Strict vigil
The purpose of the joint meeting was to enhance cooperation and coordination to strictly monitor shops and other sectors to prevent suppliers from hiking prices of commodities and services on the pretext of increasing staff salaries.
However, salary increases are not the only underlying reason for the pressure as the peg of the dirham to the dollar seems to be the most influential factor for the time being.
The dollar has been at historic lows against most major currencies, posing serious pressure on the dirham.
"The dirham is definitely undervalued for the time being, and the pressure is increasing on the Central Bank to make yet another move within the pegging margins," said Nazem Al Kudsi, chief investment officer of the National Bank of Abu Dhabi's asset management division.
The government's stance can also be explained by the fact the pressure on the dirham has eased during the past couple of weeks due to the liquidation of UAE assets held by foreigners, said Al Kudsi.
Nevertheless, other challenges are also creating pressure, including an increasing disposable income of households due to salary hikes, growing fuel costs and the additional new fees charged by several government entities, especially in Dubai.
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