The Ministry of Commerce and Industry announced that it will set prices based on import costs, an official source told local media.

According to the source, the ministry's recent study on the prices demanded by merchants, revealed that the amounts charged were exaggerated. Aiming to curb such practices, the ministry claimed that its new policies will allow consumers to buy goods at affordable prices, without harming traders.

Generally, merchants add shipment costs to the value of the goods and then multiply the sum by 2.25 or 5, based on what profits they want to make. "This means the merchant makes a profit of 125 percent. In some cases, shopkeepers can even make profits of over 400 percent, which prompted the Ministry to set out new policies to price goods," said the source.

Another phenomenon that will be curbed with the introduction of the new pricing system is seasonal discounts and liquidations. A number of merchants make big discounts during certain seasons, fooling consumers into believing that they actually incur loses when they sell goods worth SR600 for only SR 200, a common practice that helps the shopkeeper get rid of old merchandise and still make a hefty profit.

The new system will impose sanctions on merchants who manipulate prices. Mohammed Al-Asi, an economic analyst close to the ministry, said it won't be long before this new pricing system is ready. Al-Asi believed the pricing plan will reduce prices of consumer goods. "The ministry will allow a reasonable profit margin for merchants. It's in the country's best interest that we keep the prices and markets under control,” the official source commented.