Dubai: The UAE is considering a plan to give Emiratis discounts on 14 food items, gasoline and cooking fuel to help offset inflation, the head of a consumer protection body said on Tuesday.

The cabinet is studying the plan, which will allow UAE nationals to buy rice, bread, tea, sugar, milk, butter and other basic food items at cost price, said Jamal Al Saeedi, executive manager of the Emirates Society for Consumer Protection.

"There is too much inflation and it is hitting households," Al Saeedi said. "People cannot live without these items so we are looking for a way to reduce the costs."

Inflation

Inflation in the second-largest Arab economy hit a 19-year peak of 9.3 per cent in 2006 and probably accelerated to 10.9 per cent last year, the National Bank of Abu Dhabi said last month. The UAE's economy grew 7.6 per cent last year.

Food prices in the UAE, which pegs its dirham currency to the weak US dollar, will probably jump 40 per cent this year after surging 30 per cent in 2007, Al Saeedi said last week.

Under the proposal, the Ministry of Social Affairs will provide nationals with cards they can use at 16 cooperative supermarkets to be eligible for the discounts, Al Saeedi said.

Co-operative supermarkets are owned by UAE nationals and generally provide lower prices on some goods, Al Saeedi said. For the 14 food items, the supermarkets would not be allowed to take profits on sales to cardholders, he said.

The proposal, drafted by the consumer protection body and Ministry of Economy, also calls for a discount on petrol and tanks of domestic cooking fuel for nationals, Al Saeedi said.

Arab oil producers are trying to offset inflation by introducing price controls on rents, subsidising food and raising wages. Earlier this week, the Ministry of Economy set a ceiling on the maximum price retailers are allowed to charge for some basic food items to help stabilise prices.

In November last year, the Ministry of Economy warned suppliers against raising prices of goods and services in an 'unjustified' manner. Food price inflation is partly driven by the dirham's link to the dollar, which hit record lows against the euro and a basket of major currencies this month, Al Saeedi said.