Food product prices could rise to 30% in Saudi Arabia this year because of mismatch in supply and demand, migration of workers from agriculture to non-agriculture sector and decline in the US dollar.

Prices of essential commodities, particularly food products, could push up from 20% to 30% this year in Saudi Arabia, announced by the Ministry of Commerce and Industry, as reported by Arab News.

The annual report of Saudi Government on supply and prices has held responsible for price of food products to declining value of the US dollar and depleting agriculture produce owing to drought. The report has also blamed hike in export duties as a reason for the rise in prices of essential commodities.

Unfavorable growing conditions are another cause for price rise of food products in the country. Australia, Europe and some parts of North America, the major agricultural producers, have been witnessing bad weather for last few years that has impacted the agricultural produce and caused shortage of food products.

Foodstuff price inflation, in conjunction with agricultural product prices rising in the country, is similar to other countries in the Gulf Countries Council (GCC) region and not above than the UK and the US. There are no evidences that confirm local retailers’ role in the price rise.

Beside, local factors like reduction in agricultural subsidies, rise in prices of fertilizers, and cold winters have played a significant role in price rise in the country.

Apart from this, increasing demand for expatriate workers throughout the economy is contributing to the problem. The construction industry has attracted workers from agriculture sector.

The bird flu has severely hit the poultry industry of the country. It forced the government to ban the import of poultry as a result, prices in food products increased substantially. Moreover, it increased the consumption of seafood, which raised the prices of fish and prawns.

As per a Research analyst at RNCOS, “Imbalance in supply and demand is the main reason for price rise in food products in Saudi Arabia. The price could go up seeing bad weather in some major agriculture-based countries. Saudi Arab trades in the US dollar and devaluation of the dollar has severely affected the retail market in the country. Owing to falling value of dollar, Saudi Government has to purchase food products at high rates. And migration of labor from agriculture sector to industrial sector has been causing problems for the government too.”