Gulfood 2025: UAE Food Prices Drop but Stay Above Pre-Covid Levels
Food prices in the UAE have declined significantly compared to last year, providing relief to consumers, especially with Ramadan approaching. This decrease is driven by easing commodity prices and lower shipping costs. However, prices remain above pre-Covid levels, setting a “new normal” for food expenses.
Food Price Inflation Eases, But Not to 2019 Levels
Over the past two years, food inflation surged, but costs have now stabilized. Alan Smith, CEO of Agthia, explains that while food prices have dropped, they remain higher than pre-2020 levels. Essential commodities like wheat, corn, and soya are no longer seeing major price hikes but remain elevated. The UAE government continues strict price regulations to support consumers, particularly during Ramadan.
Shipping Costs Stabilize as Red Sea Crisis Eases
The Houthi attacks on Red Sea shipping routes in 2023 caused major disruptions, leading to increased transportation costs. Fortunately, the situation has improved, with shipping companies no longer forced to take longer, more expensive routes. This has helped bring down costs for businesses and consumers alike.
Beyond Raw Material Costs: Oil Prices’ Influence
Philip Werle, President of ICE Dubai, highlights that food prices are affected by factors beyond raw material costs. Transportation, packaging, and retail margins—many of which depend on oil prices—can significantly impact final prices for consumers.
Agthia’s Growth and Strategy
Agthia has successfully navigated supply chain challenges by diversifying its sourcing strategies, ensuring no shortages despite disruptions like India’s wheat export ban. In 2024, the company reported Dh4.9 billion in revenue and Dh321.8 million in net profit, reflecting a 7% increase. While Agthia had been active in mergers and acquisitions, it is now more selective, focusing on business sustainability amid rising interest rates.
While food prices have eased, a return to pre-pandemic levels remains unlikely.
