Buying staple foods now means making hard choices

The unwelcome return of food price pressures has put policymakers and investors on high alert as economies are still reeling from the coronavirus crisis. (Reuters/File)
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Updated 09 February 2021

Buying staple foods now means making hard choices

  • UN data shows food prices hit six-year highs in January after rising for 8 months

LONDON: For Cleanne Brito Machado, like millions of people in developing countries around the world, shopping for staple foods such as rice, beans, oil or potatoes now means making hard choices.

“The shopping cart is getting much smaller and we’re paying much more,” said the 41-year old, who works as a maid in Brazil’s capital Brasilia. “We’ve had to give up on little trips, visiting family at the weekend, and we haven’t been able to save any money for emergencies or to have in the bank.”

A mix of currency depreciation, rising commodity prices and coronavirus disruptions saw food inflation soar 14 percent last year in Latin America’s largest economy — the biggest increase in nearly two decades. The headline figure masks hikes in staples, such as a 76 percent jump in rice or a doubling of soy oil prices.

Other developing countries from Turkey to Nigeria also recorded double-digit jumps in food inflation. Major wheat and corn exporters such as Russia or Argentina have introduced curbs or taxes to preserve domestic stockpiles, exacerbating pressures elsewhere.

UN data showed food prices hit six-year highs in January after rising for eight consecutive months.

The unwelcome return of food price pressures has put policymakers and investors on high alert, worried what it means for inflation more broadly while economies are still reeling from the coronavirus crisis.

“Central banks will be watching the level of food prices quite carefully over the next few months because they will have to make a decision on whether to respond to this or not,” said Manik Narain, head of emerging market
strategy at UBS. Food is the single largest element of inflation baskets in many emerging markets, accounting for around half in countries like India or Pakistan compared to less than 10 percent in the US.

Rising food prices have contributed to social unrest in the past. Climate change effects are expected to exacerbate price swings and rising energy prices add to the pressure.

For those like Machado, higher food bills leaves less to spend on other goods, squeezing demand for items from travel to eating out.

Many countries have already seen hard currency revenues from sectors such as tourism crater and they lack the capacity of their richer peers to pump in stimulus.

For central banks, the temptation may be to let inflation rise and keep monetary conditions loose to support growth, say analysts.

“It is a very difficult balance — governments in emerging markets are damned if they do and damned if they don’t,” said David Rees, senior emerging markets economist at Schroders.

“As a policymaker — do you choose to support your population or choose keeping the markets happy?“

Developed economies generally see food inflation as transitory. But in developing nations, persistent food price rises in the run up to the 2008 financial crisis lifted core inflation, prompting years of interest rate hikes.

In Istanbul, food market vendor Seref Geyik says he has seen the effect of opening hours cut short by the pandemic and rising wholesale prices of fruit and vegetables.

“Consumers are leaning toward cheaper stalls, they are not looking for good quality produce,” the 53-year old said.

Relying heavily on imported unprocessed foods, Turkey saw food price rises accelerate from August, when the lira chalked up monthly losses of 5 percent or more against the dollar.

With nearly all its energy also imported, rising energy prices from early November have added to the pressure. Dry weather has meanwhile hampered production of some local crops, from hazelnuts and chestnuts to apricots and olives.

Turkey’s experience of chronically high inflation two decades ago is a cautionary tale of how price pressures can derail economic growth and shatter household and investor confidence.

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Startup of the Week: Wafeer — helping Saudis spend wisely and save money

Updated 27 November 2021

Startup of the Week: Wafeer — helping Saudis spend wisely and save money

JEDDAH: Personal finance app Wafeer is the only service in Saudi Arabia that automatically tracks user’s spending patterns in a bid to help them stick to budgets.
The fintech company was founded by Salah Al-Bassam, Ahmad Ramadan and Abdulaziz Al-Jasser in 2019.
Each founder brings their own skills to the firm — Al-Bassam is an investment professional, Ramadan specialized in tech, while Al-Jasser is an engineer.
“We believe this was the formula that made Wafeer what it is right now, the broad and diverse experience that each founder brings to the table and of course our value add investors,” Al-Bassam told Arab News.
In March, Wafeer raised an undisclosed amount in a pre-seed funding round led by Nama Ventures, with participation from RAI group, WomenSpark, and several angel investors.
At the time, Nama Venture’s general partner Mohammed Alzubi said: “We first met the Wafeer team in August of 2020. The first thing that stood out for us was how complementary was the skillsets of the team, with real role clarity from the get go.”
Al-Bassam explains that its software automatically updates expenses that are paid through the app, rather than needing manual entry.
“Beyond tracking user’s expenses, Wafeer offers personalized advice using artificial intelligence helping users get notified before overspending and gives them recommendations that help cut spending or create wiggle room,” Al-Bassam said.
He added the Saudi Vision 2030 growth initiative highlights the importance of creating more awareness of spending, savings and investment through its Financial Sector Development Program.
Al-Bassam said: “It is one of the Vision's realization programs. This program has several goals, the most important of which are achieving financial diversity, stability, and promoting the culture of saving.
“Our goal at Wafeer is to play a role in achieving these objectives with the aim of answering this ongoing question that arises at the end of each month: What did I spend my salary on?”
Wafeer has 82,000 active users in its platform, who have notched up almost 1 million transactions.
The startup has partnered up with big companies in the region, such as online marketplace Noon and Saudi fast food app Hungerstation to provide special offers to customers.
Al-Bassam said: “We are proud of our partnerships, we have signed a number of strategic partnerships, most recently with Noon and Hungerstation to provide Wafeer users with exclusive discounts and offers that match their spending behavior.”
Wafeer currently only operates in the Kingdom, but has plans to extend its services to other Middle Eastern and North African countries.


Anghami to complete US merger ‘soon,’ CEO says

Updated 26 November 2021

Anghami to complete US merger ‘soon,’ CEO says

  • Maroun said the company’s priority is growth not profitability as it seeks to increase its market share from 6 percent

RIYADH: Lebanon’s Anghami, known as the Spotify of the Arab world, will not postpone its merger with the blank-check company Vistas Media in a potential $90 million deal, according to the firm’s CEO.

Eddie Maroun said the agreement had suffered a delay due to the procedures of the Securities and Exchange Commission in the US, but the deal will still go ahead.

The process is currently in its final stages, and the implementation will be announced very soon, he told Al-Arabiya on Thursday.

Maroun said the company’s priority is growth not profitability as it seeks to increase its market share from 6 percent.

He expects Anghami to achieve profitability within three years, he added.

Subscriptions represent 80 percent of the company’s revenue with the rest coming from advertising, Maround said.

Founded in 2012 in Lebanon, Anghami is the first legal music streaming platform in the Middle East and North Africa region.


Dubai real estate sector deals back to pre-pandemic level: Land department

Updated 26 November 2021

Dubai real estate sector deals back to pre-pandemic level: Land department

  • The number of deals in October was at the highest level since June 2019

RIYADH: Dubai’s real estate market has seen the highest value of deals since March 2019, according to data from the Dubai Land Department.

Figures show that in October, 5,352 transactions worth 13.12 billion UAE dirhams ($3.57 billion) were recorded.

The number of deals was at the highest level since June 2019.

The value of real estate sales transactions in the first 10 months of 2021 are more than the whole of 2020 and the highest since 2015, according to the data.

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Oman’s Bank Nizwa welcomes merger proposal from Sohar International

Updated 26 November 2021

Oman’s Bank Nizwa welcomes merger proposal from Sohar International

RIYADH: Oman-based Sohar International Bank and Bank Nizwa are considering a merger, according to Al-Arabiya.

Bank Nizwa’s board welcomed the proposal from Sohar International on Nov. 25 to study the idea of merging the two banks, it was reported.

Bank Nizwa recorded profit growth of 14 percent in the third quarter to 3 million Omani riyals ($7.7 million).

Profit growth of Bank Nizwa increased by 6 percent in the first nine months of 2021 to 9 million riyals.

Bank Nizwa is Oman’s first dedicated Islamic bank, launching in January 2013, with fully Shariah-compliant products and services.


Foxconn’s Jusda unit seeks pre-IPO financing

Updated 26 November 2021

Foxconn’s Jusda unit seeks pre-IPO financing

  • Foxconn’s supply chain management platform seeks $300 million to $400 million

RIYADH: Foxconn’s Jusda unit is considering raising funds from private investors ahead of a potential initial public offering early next year, sources told Bloomberg.

Foxconn’s supply chain management platform seeks to raise $300 million to $400 million in the so-called pre-IPO round, the sources said.

The company will use the proceeds to expand logistics services, they said.

Jusda is also in the early stages of evaluating a potential listing in Hong Kong in the second half of next year, the sources added.

No final decision has been taken because the considerations are preliminary and details such as the size of the funding can still be changed, they said.

Foxconn spokesman Jimmy Huang said Jusda has no plan for an IPO right now, and declined to comment on the fundraising.

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