VZCZCXRO7304
RR RUEHDE RUEHDH RUEHDIR
DE RUEHAD #0440 1260532
ZNR UUUUU ZZH
R 060532Z MAY 09
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 2436
INFO RUEHDE/AMCONSUL DUBAI 8255
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE

UNCLAS ABU DHABI 000440 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EAGR EFIN ETRD AE
SUBJECT: UAE GOVERNMENT TARGETS FOOD PRICES 
 
¶1. (SBU) Summary: In response to high inflation driven in part by 
food prices which rose 30 to 40 percent in 2008, the UAE Ministry of 
Economy has implemented price cap agreements with large retailers 
and signed memoranda with Emirate-level economic entities.  As a 
result of these measures and the impact of the global financial 
crisis, prices of many food items have declined in 2009.  End 
Summary. 
 
¶2. (SBU) The UAE is a net importer of agricultural and food products 
given the unfavorable climate conditions for vegetation. In 2008, 
food prices increased in the range of 30 to 40 percent. Rising food 
prices fuelled inflation which approached 13 percent in 2008, 
according to IMF estimates.  Inflation, driven largely by high world 
commodity prices, especially oil, had already risen to a 19-year 
high of 9.3 percent in 2006 and over 11 percent in 2007, according 
to the Ministry of Economy.  However, global trends were not the 
sole driver; the government noted that prices of many items exceeded 
the global average by 25 percent.  The trend attracted significant 
attention from UAE nationals and expatriates, leading to public 
criticism and questioning the UAE dirham's peg to the US dollar. 
 
¶3. (SBU) Beginning in 2006, the Ministry of Economy (MoE) took a 
number of steps to curb prices of basic goods, including 
liberalizing import of 15 food items, passing Federal Law Number 24 
on Consumer Protection in August 2006, coordinating with 
supermarkets to freeze prices of specified food items, establishing 
an MoE Consumer Protection Department (CPD) to monitor the price of 
consumer goods, and developing a national strategy to build 
sustained food reserves.  The MoE also signed agreements with local 
retailers to actually reduce prices of specific food products. 
CPD's Manager, Dr. Hashim Al Neaimi, told EconLES that the MoE 
continues to coordinate with major suppliers and with large outlets 
to review any potential increase in prices of staple goods. 
Further, MoE has recently promised to reduce the prices of 1,000 
items to coincide with Gulf Consumer Protection Day.  As a result of 
these UAEG measures and the global downturn, food prices cooled off 
in 2009.  Dr. Al Neaimi claims the partnership between MoE and major 
suppliers led to a decrease in prices of basic goods by more than 30 
percent. 
 
¶4. (U) Local English-language daily The National tracked movement of 
food prices during 2008-2009 at the three largest Abu Dhabi 
supermarkets (Carrefour, LuLu and the Abu Dhabi Cooperative 
Society).  This unscientific poll showed that 2008 prices of 10 
items rose by an average 50 percent at LuLu, 31 percent at Abu Dhabi 
Coop, and 27 percent at Carrefour.  However, government efforts are 
having a positive impact.  The LuLu chain agreed to price caps on 35 
key items with the MoE, while the Abu Dhabi Coop General Manager 
told The National that prices of oil and flour had been coming 
down. 
 
¶5. (SBU) Comment: While consumer concerns about inflation have 
subsided in 2009, the MoE is continuing its public campaign to keep 
prices down.  Emirati nationals are particularly vocal about 
inflation, perhaps out of a sense of entitlement in an oil-rich 
state, or simply because large families have big grocery bills.  In 
addition to the Ministry's efforts, the UAEG offers food staples 
(e.g., rice) to Emirati citizens at a price much lower than the 
prevailing price in the market. 
GREENE