RIYADH: The Ministry of Commerce and Industry is drawing up a plan to produce a price index for food products and domestic consumption to give consumers the chance to observe international markets and see from close range the prices of goods. “The ministry is currently working on a series of studies on all types of products to identify what prevents them from reaching the market and address those hindrances and prevent price rises,” said Minister of Commerce and Industry Abdullah Zainal. “The Kingdom is influenced by the international markets around it.” Price indexes, the minister said, give new data on market developments, and the ministry can observe the arrival time of cargoes, their movements from the country of origin, and price variations. “We have enrolled the services of persons from outside the ministry to follow index movement and be an independent eye observing each product,” he said. A ministry source told Okaz/Saudi Gazette that an international firm had been brought in to develop the index and provide international prices of basic goods on a daily basis. “A summary of those basic products will be given in the index once it has been produced byw the firm, enabling the consumer to observe prices on international stock markets and the local market,” the source said. Specialists say that associating the price index with global stock markets is a “step in the right direction, bringing the country in line with the First World”. Abdul Rahman Al-Sanea, a professor of marketing and writer on the economy, says that promoting consumer awareness is a significant issue. “There have been unjustifiable price rises in consumer goods such as fruit and vegetables, rice, sugar and flour and other essential foodstuffs,” Al-Sanea said. “These are basic necessities for every family, irrespective of their economic status, along with private hospital costs and the price of medication from pharmacies, things which no family can go without.” He added that price rises had also hit other important industries, like construction and contracting due to price rises in materials on which the sectors are founded such as steel, wood, cement and ceramic. “The paralyzation affecting the industry could cause a holdup or a halt in investment projects, which could in turn lead to huge losses hitting the economy,” he said.Issam Khalifa, a member of the Saudi Economic Society, said that essential and complementary products in the Kingdom were witnessing gradual rises across the board. “Some product prices drag other products along with them, whether alternatives or complementary,” he said. “The living cost index in the Kingdom, which is the most important index in terms of general price levels, showed in September 2010 a minor increase of 5.9 percent on last year in a range of products including food and drink and real estate.” Most affected, Khalifa said, were Saudi families of limited income, who he described as being faced with a “genuine crisis”. “It's expected that the high cost of living will have extremely serious economic, social and moral effects in the future,” he said. “Many Saudis are now unable to live with these high costs nor meet living requirements and have been forced to make difficult choices and give up many basic necessities.” Khalifa added that bringing global stock prices into the index was significant due to the “many external as well as internal reasons for price rises”, citing the price rises of goods imported from industrial nations and the Saudi riyal's link to the US dollar, the effect of changing exchange rates with the euro and British pound, and increase in the price of goods imported from Europe, as well as rises in cargo and insurance costs.
