| 19 Nov 2008 |
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Saudi Consumer Goods Prices to Fall 30pc
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JEDDAH - Prices of consumer goods including foodstuffs in the kingdom are expected to fall by 30 per cent in about three months as a result of a worldwide recession and the fall in oil prices.
Yousuf Al Qafari, CEO of Abdullah Al Othaim Markets Company, has been reported as saying by the Arabic daily Al Riyadh that he expected prices of all commodities, including rice, would go down by 30 per cent.
He said in an analysis that prices of goods imported from Europe, Australia and other parts of the world would decline because of rising exchange rate of the US dollar.
The currencies of Saudi Arabia and other Gulf Cooperation Council (GCC) countries, except Kuwait, are pegged to the US dollar.
"We'll see substantial reductions in prices within the next three months," Al Qafari said and attributed the fall in prices to a reduction in the cost of transportation and insurance as a result of a decline in oil prices.
He said the continuous increase in prices of essential commodities had resulted in rising inflation to record levels of nearly 11 per cent in August 2008. He said a fear of worldwide recession would encourage importers and traders to empty their stocks by cutting prices in order to avoid losses.
Abdullah bin Suleiman Al Robaian, who is chairman of a food manufacturing company, said the prices of primary goods imported from foreign countries had gone down 20 to 40 per cent.
"This will have a positive impact on prices of national commodities," said and added that many Saudi industries were facing problems due to a lack of funds and a decline in exports.
It may be noted that the Saudi Council of Ministers has approved measures to fight price increase in the kingdom which include investment in agricultural and livestock projects in foreign countries, and establishment of a holding company to manage such projects.
The Saudi Press Agency (SPA) reported that the recent meeting also set out mechanisms to implement the programme adopted by the government earlier this year to control prices.
"The new measures are aimed at reducing the financial burden caused by the big jump in prices of essential commodities as well as agricultural and animal products," the Cabinet said, and called upon the ministry of commerce and industry to prepare a comprehensive study on the kingdom's future food requirements.
Madani said that experts will be appointed to conduct a detailed study on the kingdom's future food requirements to achieve food security, build strategic storages of essential commodities, and set up infrastructure facilities for the purpose.
The ministry of foreign affairs will prepare draft agreements for Saudi Arabia's external investments in agriculture, cattle and fisheries within two months. The agreements will include necessary incentives and guarantees for such investments.
He said that the Cabinet meeting also decided to expand the kingdom's agricultural, animal and fisheries investments abroad and added that such investments should not be concentrated in a single country.
Saudi businessmen will be encouraged to invest in the sector by providing them with credit and finance facilities through public finance institutions. "This will enable supply of these products at reasonable prices and ensure food security at medium and long-term levels," SPA quoted Madani as saying. The Cabinet said finance for infrastructure projects required for agricultural and animal investments in foreign countries would be arranged through the Saudi Fund for DevelopmentSaudi Fund for Development
, and regional and international financing institutions.
By Habib Shaikh
© Khaleej Times 2008
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