Thursday, September 13, 2007

Ramadan demand

Khaleej Times:
DUBAI/ABU DHABI — Even though the prices of essential commodities went up during the past few days, heavy rush of shoppers was witnessed in retail outlets in the country yesterday as the residents started preparation for the holy month of Ramadan.

As in past years, according to retailers, the trend of increasing the prices of essential commodities during Ramadan continued this year also.
...
The prices of vegetable, fruit and meat have been gone up in the capital but shoppers thronged the market to shop in preparation of the first day of Ramadan. Price increase varies from fruit to fruit and vegetable to vegetable. The prices have gone up just three or four days ago. The prices of vegetables went up by Dh3 whereas the fruits prices are up by Dh5 to Dh10.
"Even though". "But." These suggest that there is some sort of paradox. Why are consumers buying more even though price has increased?

Actually, the cause of the price increases is the increase in demand during Ramadan. If prices did not adjust there would be a shortage. The increase in the prices encourages suppliers to put more on the market. Hence, quantity increases. Price and quantity are above pre-Ramadan levels.

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