Hoarding by importers to blame for slow drop in prices
Large-scale hoarding by importers are preventing the prices of commodities fromprices of commodities falling in the UAE's retail sector, according to the Consumer Co-operative Union (CCU), which includes 14 top consumer co-operative societies in the country.
Speaking to Emirates Business yesterday, Majid Hamad Al Shamsi, Chairman of CCU and the Union Co-operative Society, said prices would start to drop gradually in the next few months, especially in May.
"The prices of some commodities, such as cooking oil and rice, dropped this month by 15 per cent. But consumers expect a greater reduction in prices and are right in doing so, given that prices have dropped far lower globally, as well as demand," Al Shamsi said.
He said prices have not fallen as expected so far because importers hoarded huge quantities of goods earlier when their prices were still high in global markets. When prices of goods fell globally recently, they went in for another buying spree and then made agreements among themselves and with retailers to sell these goods at prices close to the old ones. Therefore, consumers did not feel any real fall in prices.
"We noticed a resistance among some importers to let prices fall, in order to gain more profits. However, the demand for goods will certainly drop by the end of May when the summer vacation starts. The real drop in prices will start in May, and may even reach 50 per cent," Al Shamsi said.
"Most co-operative societies began 10 to 30 per cent discounts on 60 commodities a few days ago and they will continue this in the first week of March. We hope these discounts are permanent and the beginning of a big and real fall in prices."
However, Faisal Al Arshi, Deputy General Manager of Abu Dhabi Co-operative Society, which runs 10 branches and is the emirate's biggest, said rates will only drop if importers let go of their resistance to price falls.
"We called on the Ministry of Economy to intervene and take it up with the importers. But it said the UAE is a free market and no restriction should be imposed. The MoE only intervenes when there is huge exaggeration in prices.
"However, importers do exaggerate the prices greatly. If we review prices of certain commodities in the UAE, Saudi Arabia and Bahrain, we will find there are big differences in prices in these countries. The reason is the importers, not the retail outlets."
"The Abu Dhabi Co-operative Society will continue its policy of selling 253 basic commodities at cost prices, which was announced last year. On Sunday we will start special offers for a large number of commodities and their prices will drop by 10 to 30 per cent, Al Arshi said.
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