The Gulf Arab state has hooked up with the Union Cooperative Society supermarket chain to cut prices on two varieties of rice and Arabic bread, WAM said, adding that the reduction would run from April 1 to the end of the year.

The products will be sold at 2004 prices, WAM said, quoting a news conference given by the store chain and the Ministry of Economy. It did not say what was the difference between prices today and seven years ago.

Rising living costs in Arab countries are one of the driving forces behind the revolts that have toppled leaders in Egypt and Tunisia and are now challenging autocratic regimes in Libya as well as nearby Bahrain and Oman.

The UAE, the world's third-largest oil exporter, has escaped the unrest so far. Its relatively small local population has one of the world's highest economic outputs per capita at over $47,000.

A range of retailers in the country have already agreed to cut their prices for many food and other essential commodity items by up to 40 percent for one month.

Consumer prices fell to 1.6 percent on an annual basis in January as an unexpected drop in food costs helped push prices into a second monthly decline in a row, data showed.

UAE inflation is seen accelerating to 2.8 percent this year as the second-largest Arab economy recovers from the impact of Dubai debt woes.