20% hike in food prices expected as electricity costs soar

AMMAN — Food prices are expected to go up this year by nearly 20 per cent, according to a leading sector representative, who also said that demand for commodities is projected to slow down. 

Raed Hamadah, representative of the food sector at the Jordan Chamber of Commerce, attributed the anticipated increase in prices to the 15 per cent rise in electricity tariffs, which went into effect at the beginning of this year.  

The increase in power tariffs, Hamadah said, will affect both imported and locally produced food products, and “consumers will ultimately pay the price.”

Electricity prices represent a major part of the operational costs of shops and grocery stores, he told The Jordan Times Monday, citing refrigeration as a major cost since have to be cooled 24 hours a day. 

As living costs go up, employees at commercial outlets are expected to request pay raises, noted Hamadah, who is president of the Jordan Association for Restaurants and Sweets Shops Owners.

With prices inflating, demand for items will also slow down, he explained, which will affect the profitability of businesses. 

Hamadah claimed that profits of food stores and hypermarkets went down by nearly half in 2014 due to rising operational costs. 

Another concern for the sector, he added, is the recently endorsed Income Tax Law that raised the tax rate on commercial businesses with profits of more than JD100,000 a year to 20 per cent from 14 per cent.