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UAE: A Cut in Diesel Prices; Will this result in a drop in grocery prices for Ramadan?

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The cost of moving goods across decreased resulting in customer benefit

UAE: The price of necessary goods will drastically decrease during Ramadan thanks to the UAE’s reduction in diesel costs. As a result of the government’s announcement that diesel prices will be reduced by 7% in March, grocery costs in the UAE will also decrease this month.

The Fuel Pricing Committee of the United Arab Emirates reduced diesel prices by 24 fils but petrol prices increased by 4 fils per litre. The cost of diesel per litre in March is Dh3.14 as opposed to Dh3.38 in February.

Globally, consumer and commodity prices are highly correlated with fuel prices because they drive down shipping and transit costs, which typically result in reduced retail pricing for groceries and other consumer goods. As a result, consumers will presumably get the chance to purchase necessities at a reduced cost during Ramadan’s fasting season which is anticipated to start on March 23.

Diesel is primarily utilised in commercial vehicles, therefore the decrease in the prices directly results in a decrease in logistics costs, as per Dr Dhananjay Datar, managing director and chairman of Al Adil Trading Company. This reduction in fuel prices naturally reflects in the rates of commodities and food items. This will benefit consumers, wholesalers, and other stakeholders, such as restaurants and catering organisations, he added.

In UAE, almost 90% of commercial vehicles run on diesel. Therefore in March, the cost of moving goods from different emirates and from warehouses to supermarkets is reduced which eventually benefits customers.

For the holy month of Ramadan, basic groceries will be available at significantly low costs. In the months preceding Ramadan, the retailers will offer several sales events for the customers.

Along with the decrease in diesel prices, there is also a decline in shipping charges over the past few months which results in a drop in commodity prices in the UAE and around the world with the availability of specific commodities from Ukraine. The increased shipping charges during the pandemic are now becoming stable.

Inflation in Dubai decreased by 0.6% in January 2023, according to the most recent statistics report provided by Emirates NBD Research on Tuesday, bringing the annual inflation rate down to 4.6% year-over-year from 5.2% in December 2022.

The UAE government always tries to keep stable and affordable costs for the customers which are equally reasonable and competitive at all levels says Kamal Vachani, group director and partner at Al Maya Group.

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