UAE food prices likely to increase in 2017
DUBAI, February 25, 2017
The food prices in the UAE are likely to increase this year owing to the surging demand across the emirates in addition to the spillover effects from a rise in agricultural food prices in 2017, said an expert.
Global food prices stopped plunging in 2016, with a contained -1.5 per cent drawback of the FAO Food Index. This was the lowest decrease in five consecutive years, stated Euler Hermes, the world’s leading provider of trade-related credit insurance solutions.
In relation to UAE’s reliance on food imports, Euler Hermes expects spending on food & beverages (F&B) to grow at a rate of eight per cent until 2018, which reinforces the strong growth trends.
In 2017, food consumption in the UAE is estimated to represent a 21 per cent share within the GCC market, the second highest in the region behind Saudi Arabia (59 per cent), stated Euler Hermes.
Being largely dependent on food imports, the six GCC nations are most exposed to the fluctuations in international food prices, it added.
Jules Kappeler, the chief executive of Euler Hermes (Middle East) based in Dubai, pointed out that since the UAE imports more than 80 per cent of its food needs, it will face spillover effects from a rise in agricultural food prices in 2017.
"Already our analysts noted a sharp improvement in sugar prices (over 34 per cent) and vegetable oil (over 11 per cent) last year," he added.
Euler Hermes expects globally, agricultural commodities to report a slight pick-up after bottoming out in 2016.
"Given this global environment, coupled with a 20 percent higher price of oil in 2017 (compared to the average price of oil last year), and an increasing demand for food due to organic population growth and international tourism, agrifood import firms face slightly higher food prices," noted Kappeler.
"This is also linked to the fact that the agrifood sector ranks among the three most regulated sectors for trade," he added.-TradeArabia News Service