Saudi traders and experts have said that the effect of the declining oil prices will reflect on food prices only after a period of four to six months due to the large quantities purchased at higher prices.
They said that there will be a 10-15 percent decline in food prices if oil prices continue to show the current lows, noting that the difference in prices of locally produced products will not be much compared to global commodities due to the stable prices of oil in the Kingdom.
Abdulkarim Abbar, a former member of the Committee of Food Products at the Jeddah Chamber of Commerce, confirmed that the prices of food products will decline by about 10 to 15 percent, especially as shipping prices control at least 15 percent of the final price of a product and vary depending on the country of import.
He said that the decline would take time to be evident due to the large amounts of food purchased at higher rates and because food contracts are signed for a period of six months.
Regarding the competition, he said there are local products that compete with imported products, noting that customers are keen to use these products regardless of the price. He also said that there is a need to develop some local products to match the quality of their imported counterparts.
Meanwhile, Saeed bin Zaqr at the Chamber of Commerce said there are no indications that the declining price of oil will impact the price of food within the next two months, but if oil prices continue at their current price of $58 per barrel or less, the price of imported foodstuffs will decline within six months.
As for locally manufactured products, he said the impact on price would be minimal, especially as the price of raw materials remains fairly steady.
With regards to changes in locally produced products versus imported products, Dr. Hamza Aoun, a member of the Trading Committee at the Jeddah Chamber of Commerce, said prices are mostly set by competition, as consumers do not change their consumption patterns of such products easily. He also said that competition is expected to be very strong in the coming months