JEDDAH: Food prices in Saudi Arabia are likely to fall within one month, said Dr. Faisal Abdulgader, manager of the Corporate Social Responsibility section at the Jeddah Chamber of Commerce and Industry (JCCI).
“All prices including food and other goods will fall within the next three weeks or at the most by next month,” he said.
Abdulgader was responding to complaints by consumers who say that prices, which skyrocketed because of high oil prices, have not come down even after oil has lost its value by one third.
Lubna Balki, a student of business studies at Prince Sultan University College of Women in Riyadh, said, “We hear on international news reports that the cost of living abroad has fallen due to the decrease in oil prices but we in Saudi Arabia are still paying astronomical prices for practically everything we buy.”
Agreeing with Lubna, Majed Al-Husseini, a Saudi father of five, said: “When oil prices were high, economists and financial experts in the Kingdom said that we were paying more for food and other goods because of inflation and it was something we had to accept because Saudi Arabia was forced to import a majority of items from foreign countries. But if this is true, why haven’t we now begun importing items on lower prices from these same countries?”
The answer to these questions may very well lie in the inventories of local retailers, according to Dr. John Sfakianakis, chief economist of SABB in Riyadh.
“When thinking about overall pricing one has to take into consideration the regulatory oversight which means that many of the traders in the Kingdom purchased and stocked substantial inventories of food and other items when oil prices were triple what they are today. They would suffer a loss if they were to lower prices now in accordance with the recent decrease in oil prices,” he said.
Sfakianakis added that prices were slowly coming down but were still not in line with consumers’ expectations. There was, according to him, a “lag-effect” in terms of how prices have fallen abroad compared to today’s price range in the Kingdom. “I think Saudi Arabia will see price decreases by the second quarter of 2009. If it does not, then it would mean the dilemma lies in retail competition as also in the fact that traders are keeping prices high without any real reason.”
