Huge wave of commodity price inflation expected – ARAB TIMES

‘You have to spend an additional 28 KD for every 100 KD’

KUWAIT CITY, February 5: According to experts, the rate of increase in commodity prices in Kuwait amounts to 28%. This means that every citizen and resident is now required to spend an additional 28 KD for every 100 KD to support themselves, Al-Anba daily reports. Experts have warned that up to 300,000 different products, whose prices are set by the Union of Consumer Cooperative Societies, could see a price increase with the application of the law on the protection of competition, which prohibits setting a minimum price. They said, “This means there is a strong price wave ahead… backed by law”. While Kuwait has witnessed repeated meetings in the last period regarding the cancellation of Decision No. 67/2020 of the Minister of Commerce and Industry to fix prices during the COVID-19 crisis and the request for price liberalization, the experts claimed that there would be price increases of up to 35% if the Ministry of Trade and Industry reversed its decision. They underlined that this problem must be solved and that there should be a rational control which takes into account the balance between all the parts.

To augment
Experts pointed out that the price increase is due to many factors prevailing around the world and directly affecting the supply chain, including low production and supply globally, the cost high land and maritime transport, partial employment and lack of employment. .

Meanwhile, knowledgeable sources have revealed that the government is not absent from the scene and is working tirelessly to maintain market stability by qualifying and motivating companies and suppliers. They pointed out that periodic follow-up decisions are taken to prohibit the export and re-export of goods, as well as to provide financial support to certain suppliers in the event of shortages in the local production of certain goods. In this regard, the chairman of the board of directors of the Consumer Protection Association Mishal Al-Manea revealed that the association, in 2021, monitored the increase in prices of many goods in cooperative societies and markets. . He said the price escalation occurred at varying rates ranging from 7.5 to 28 percent, so it is believed that every citizen and resident has to pay an additional 28 KD for every 100 KD spent.

With the adoption of Law No. 72/2020 for the protection of competition and its implementing regulations, Al-Manea warned of another wave of inflation to come which will directly endanger consumers. He indicated that those to whom the law applies were defined as individuals or organizations carrying out an economic or commercial activity regardless of its legal form, such as traders and companies as well as cooperative societies, which is very dangerous. . Al-Manea explained that the regulation specifies in its description of practices harmful to competition that the dominant person is prohibited from abusing its dominant position in order to limit, restrict or prevent competition. This includes directly or indirectly fixing or imposing the prices of the products or fixing minimum prices or conditions for reselling them. This means that co-operative societies have neither the right nor the ability to fix commodity prices, indicating that “a wave of rising prices is coming… and by right”. He went on to explain that according to the law, companies can ask cooperative societies to raise their prices without involving the Union of Consumer Cooperative Societies. If the board of directors refuses, they can sue according to the text of this article and win because the law is in force. There are up to 300,000 different products, the prices of which are fixed by the Union of Consumer Cooperative Societies, which may experience a price increase with the application of the law on the protection of competition, which prohibits the fixing of a minimum price or the imposition of prices.

If the Ministry of Trade and Industry reverses its previous decision, which was made during the COVID-19 crisis, to fix prices, there will be price increases of up to 35%. This requires rational control that takes into account the balance between all parties. Al-Manea said: “Kuwait is of a special nature as it imports most of its needs, which means it is affected by the supply chain crisis, rising commodity prices and rising prices in the country of origin. including the cost of shipping, which has doubled. However, customs duties in Kuwait are low, which means that the increases we are seeing are currently unjustified to reach this magnitude”. In the same context, government sources explained that the rising prices are a global phenomenon that prevailed during the period of the COVID-19 pandemic and trickled down to the Kuwaiti market by extension. It has thus pushed up the prices of goods and services locally during the pandemic for several reasons, the first of which is the rise in the prices of all raw materials on the world market, which was followed by a rise in the prices of raw materials in the local market. Another reason was low global production, and therefore low supply, as raw materials from factories reached a wait rate of 90 days and eventually decreased to 65. Other reasons include the high cost of land and sea freight, partial exploitation, lack of manpower, scarcity of containers and high storage prices due to scarcity of warehouses.

Regarding the increase in meat prices, the sources said that the main reason is the spread of diseases and epidemics in exporting countries, which affect meat prices in the local market due to the lack of imports, adding that a global increase in feed prices has also directly affected prices. They revealed that the Ministry of Trade and Industry monitors the situation in all markets around the clock to prevent any unjustified price hikes or manipulation of the capacities of citizens and residents.

The sources claimed that the ministry has taken several measures to reduce prices, especially food prices, and maintain balance in the market by qualifying and motivating companies that supply needed goods and commodities. They explained that other measures taken by the ministry include banning the importation of certain foodstuffs and necessary goods and goods, providing financial support to certain suppliers of necessary foodstuffs and goods in case shortage of local production, cooperation with government agencies to overcome barriers faced by businesses and suppliers, facilitation of classification procedures and extension of import licensing. In addition, the Minister of Trade and Industry had taken a decision to fix food prices during the pandemic. Furthermore, the Executive Director of the Kuwait Shipping Companies & Agents Association (KSCAA), Ahmed Eid, explained that the shipping industry has seen the cost of transportation double since the onset of the COVID-19 pandemic until the end of the year 2021. He attributed this to several reasons such as
1- Unavailability of ships and shortage of containers due to the increased demand for consumables, which has affected the carrying capacity of ships and the lack of sufficient space for the transport of cargo containers.
2- The presence of restrictions in international ports, the shortage of stations and the shortage of manpower, which have led to traffic jams and long waiting times for ships to unload goods.

Eid explained that a significant drop in 40ft container tariffs has been observed in the current period, from USD 9,000 in the last quarter of 2021 to USD 7,500, for goods from China, which is the largest exporter of goods in the world. the world. Such increase and decrease in rates is global. The rates were $20,000 for containers from China to the United States, and $15,000 for those to Europe and the North, provided there was enough space at board the ship. The 2021 report published by the United Nations Conference on Trade and Development (UNCTAD) on the review of maritime transport said that world import prices could increase by 11% and prices of consumables by 1.5% between the current period and the year 2023 if the disruptions to shipping and supply chains are not stopped, and restrictions imposed at global ports and container terminals are not taken into account.

The report spoke of the need to work towards finding new solutions that include the development of infrastructure and technology for maritime transport, digitalization and trade facilitation measures. He indicated that there will be large-scale transformations in shipping in the presence of the pandemic. Regarding the restrictions imposed on the reception of ships loaded with goods in Kuwait, Eid said that there was a delay in issuing entry permits for regular ships loaded with goods from importers, contrary to what which was in place prior to 2019 with respect to scheduled ships visiting Kuwaiti ports. on a continuous basis, and have a certificate of registration from the local maritime agency, contrary to what is applied in Ministerial Resolution No. 282/1980. He pointed to the high daily rental cost of ships carrying cargo. Eid concluded by saying that the KSCAA, with the cooperation of the Kuwait Ports Authority, is working hard to exploit and overcome all difficulties and problems to facilitate the entry and exit of vessels loaded with goods from importers. and to avoid delays for international ships loaded with goods.

Previous Third Circuit argues that applying PA usury law to auto loans issued to PA residents at out-of-state locations does not violate Commerce Clause | Ballard Spahr LLP
Next Systems Integration Market 2022 Growing Demand, Major Trends with Major Key Players – Lockheed Martin Corporation, BAE systems, IBM, Hewlett-Packard, Oracle Corporation, Harris Corporation, etc.