Prices Of Commodities Are Expected To Rise Rapidly

Experts estimate that the pace of growth in commodity prices in Kuwait reached 28 percent. According to Al-Anba daily, this means that every citizen and resident must now spend an extra KD 28 for every KD 100 spent on his requirements. Experts have cautioned that the adoption of the Competition Protection Law, which forbids setting a minimum price, might result in price increases for up to 300,000 distinct items whose prices are established by the Union of Consumer Cooperative Societies. "This suggests a high wave of pricing is coming... supported by legislation," they warned

"This suggests that a high wave of pricing is on the way... supported by legislation." While Kuwait witnessed numerous meetings in the recent period regarding the cancellation of the Minister of Commerce and Industry's decision No. 67/2020 to fix prices during the COVID-19 crisis and the demand for price liberalization, experts predicted that if the Ministry of Commerce and Industry canceled its decision, price hikes of up to 35 percent would result. They emphasized that this is something that has to be addressed and that there should be a sensible control in place that considers the balance between all parties.

Increase

The price increase, according to the experts, is attributable to a number of global variables that have a direct impact on the supply chain, including weak global production and supply, high land and sea transportation costs, partial employment, and a shortage of employment.

Meanwhile, reliable sources claim that the government is present and working hard to ensure market stability by certifying and motivating businesses and suppliers. They emphasized that decisions are made on a regular basis to prohibit the export and re-export of commodities, as well as to offer financial assistance to particular suppliers in the case of a shortfall in local manufacturing of certain items. In this regard, Mishal Al-Manea, Chairman of the Board of Directors of the Consumer Protection Association, said that the organization monitored the rise in the costs of numerous commodities in cooperative societies and marketplaces in the year 2021. According to him, the price hikes happened at varied rates ranging from 7.5 to 28 percent, meaning that each citizen and resident is expected to pay an extra KD 28 for every KD 100 purchased.

With the passage of Law No. 72/2020 for the Protection of Competition and accompanying Executive Regulations, Al-Manea forewarned of a new wave of inflation posing a direct threat to consumers. Individuals or organizations involved in economic or commercial activity, regardless of legal forms, such as traders and corporations, as well as cooperative societies, are those to whom the law applies, according to him, which is extremely harmful. According to Al-Manea, the rule states that it is unlawful for the dominant person to misuse dominance with the intent of limiting, restricting, or blocking competition in its description of behaviors damaging to competition. This involves determining or enforcing product pricing, either directly or indirectly, as well as establishing minimum prices or conditions for reselling them. ” He went on to say that firms can ask cooperative societies to raise their rates without engaging the Union of Consumer Cooperative Societies since the legislation allows them to do so. If the board of directors refuses, they can sue on the terms of this article's language and win since the law is in effect. Up to 300,000 distinct items whose prices are established by the Union of Consumer Cooperative Societies might see price increases if the Competition Protection Law is implemented, which forbids setting a minimum price or imposing pricing.

Cancels

There would be price increases of up to 35% if the Ministry of Commerce and Industry removes its prior order to set prices, which was made during the COVID-19 crisis. This necessitates reasonable control that considers the balance of all stakeholders. "Kuwait is unique in that it imports the majority of its needs, which means it is affected by the supply chain issue, the rise in raw material costs, and price hikes in the nation of origin, including the cost of transportation, which has doubled," Al-Manea added. However, because Kuwait's customs taxes are modest, the recent hikes are unreasonable to that degree." It pushed for an increase in local prices of goods and services during the pandemic for a variety of reasons, the most important of which was a rise in global raw material costs, which was followed by a rise in commodity prices in the local market. Another cause was sluggish worldwide output, which resulted in a shortage of raw materials, which reached a 90-day waiting rate before dropping to 65 days. Other factors include the high cost of land and sea freight, incomplete operations, a lack of labor, container shortage, and high storage charges owing to warehouse scarcity.

Exporting

The major cause for the rise in meat costs, according to sources, is the development of illnesses and epidemics in exporting nations, which affect meat prices in the local market owing to a shortage of imports, as well as a global rise in fodder prices, which has had a direct impact on pricing. They indicated that the Ministry of Commerce and Industry is constantly monitoring the situation in all marketplaces to prevent any unjustifiable price increases or manipulation of citizens' and residents' capacities.

According to the sources, the ministry has taken many steps to cut prices, particularly for food commodities, and to preserve market equilibrium by qualifying and stimulating enterprises that produce critical goods and items. Other measures taken by the ministry include banning the import of certain food items and necessary goods and merchandise, providing financial support to some food and necessary goods suppliers in the event of a shortage in local production, cooperating with government agencies to overcome obstacles faced by businesses and suppliers, facilitating classification procedures, and extending import licenses, according to the statement. In particular, during the pandemic, the Minister of Commerce and Industry made a decision to set food prices. Furthermore, Ahmed Eid, Executive Director of the Kuwait Shipping Companies & Agents Association (KSCAA), stated that the cost of transportation in the marine transport industry increased by a factor of two from the start of the COVID-19 epidemic to the end of 2021. He linked this to a number of factors, including

1- Ships were unavailable and containers were in limited supply due to increasing demand for consumables, which impacted ship carrying capacity and cargo container transportation space.

2- The presence of limitations in international ports, a lack of stations, and a labor scarcity resulted in traffic congestion and a long wait for ships to offload their cargo.

According to Eid, rates for 40-foot containers have dropped significantly in the present era, from USD 9000 in the fourth quarter of 2021 to USD 7,500, for items coming from China, the world's largest exporter of commodities. Such a rise and fall in rates is a global phenomenon. Containers from China to the United States cost USD 20,000, whereas containers bound for Europe and the North cost USD 15,000 if there is enough room on board the ship.  Such a rise and fall in rates is a global phenomenon. Containers from China to the United States cost USD 20,000, whereas containers bound for Europe and the North cost USD 15,000 if there is enough room on board the ship. According to a report released by the United Nations Conference on Trade and Development (UNCTAD) in 2021 on the review of maritime transport, global import prices could rise by 11% and consumable prices by 1.5 percent between now and 2023 if disruptions in shipping and supply chains are not addressed, as well as restrictions imposed in global ports and container terminals.

Solutions

The research mentioned the need to concentrate on new solutions, such as improving maritime infrastructure and technology, digitalization, and trade facilitation measures. It predicted that in the event of a pandemic, large-scale changes in marine transportation would occur. In response to the restrictions imposed on receiving ships loaded with goods in Kuwait, Eid stated that there is a delay in issuing entry permits for regular ships loaded with importers' goods, in contrast to what was in place prior to 2019, with regard to regular ships that visit Kuwaiti ports on a regular basis and have a local marine agency registration certificate, contrary to what is applied in ministerial resolution No. 282/1980. He emphasized the high daily rental cost of a cargo ship. Eid finished by noting that the KSCAA is working hard with the Kuwait Ports Authority to harness and overcome all challenges and problems in order to expedite the entry and leave of ships carrying importers' products, as well as to avoid delays for foreign ships carrying commodities.

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