RIYADH, 19 October 2007 — The Council of the Saudi Chambers of Commerce has opposed a suggestion that the government should subsidize certain products that are facing price increases by facilitating their sale to all levels of society at a unified low price.

The council has opposed the suggestion saying that this would add extra burden to the government and would not be fair to all citizens, the Al-Riyadh newspaper reported.

Abdul Rahman Al-Rashid, chairman of the Council of Saudi Chambers of Commerce, said, “The government now has a good and practical option to solve the current crisis of high prices by establishing a system that entails granting ration cards to low-income citizens. This would enable them to buy essential commodities at below-market prices.”

He also said it was important to focus on low-income people and that this solution would help end their suffering. Al-Rashid said that the Council of Saudi Chambers of Commerce has identified an unprecedented rise in petrol prices, changes in consumption patterns of exporting countries and changes in financial policy as the causes of the rise in prices of commodities in the Kingdom. He added that this is regardless of whether the goods are locally manufactured or exported.

Increases in petrol prices have led to a rise of the cost of raw materials and freightage fees. Petrol and its derivatives are considered to be the basic elements in manufacturing food and agricultural products, which depend on chemical fertilizers.

He added that Saudi Arabia’s inflation rate is considered to be the least among Gulf countries.

“It represents only 4.4 percent, while in Qatar it is 10 percent and in Emirates it is 8 percent,” he said.

Exporting countries have also recently witnessed major economical growth. This has especially been the case with countries that export basic food products such as rice, wheat and grain to the Kingdom.

India, for example, has witnessed an economical growth of 8 percent for the seventh consecutive year, which has led to an increase in India’s middle class population. This in turn has meant that Indians themselves have increasingly become able to afford higher price commodities like Basmati rice. The increased demand for Basmati rice has so caused its price to increase.

The same has occurred in Russia in relation to grain and in China in relation to milk powder.

“The whole world has been affected by the change in rates between the US dollar and the Yuan. This has led to a noticeable increase in the Yuan’s rate against the US dollar, which in turn has led to the increase of prices of products,” said Al-Rashid.