Rise in prices of staples like flour and sugar has put high-end bakeries and pastry shops under pressure, forcing them to raise prices or shut down.
Pastry outlets say they cannot claim government support to stay afloat – with raw materials like flour and sugar used by them falling under the ‘luxury’ category.
A leading bakery in the kingdom, Daskalidès Bahrain, known for its exclusive Belgian chocolates, had to shut shop owing to ‘increasing costs of running the business’.
Food inflation has soared across much of the developing world since Russia’s invasion of Ukraine and has trapped several countries in a cycle of rising prices, according to a recent report by the World Bank.
The Food Price Index from the UN’s Food and Agriculture Organisation also rose for 12 consecutive months through May before easing in June to 124.6 points, still up 34 per cent from a year earlier. The index measures international prices of a basket of food commodities.
Bahraini entrepreneur, senior businesswoman and ex-banker Huda Radhi, who founded Daskalidès Bahrain, said traders were now receiving goods at a higher price from their country of origin due to several factors, including the Russian war, climate change, increase in oil price and the resultant shipping costs.
“All items have become expensive, and it is difficult to bear the rising cost of shipping and that of goods in their country of origin,” Ms Radhi, who now heads Richmond Advisory Services, told the GDN.
“I had to suspend my chocolate business for that reason, shipping was extremely expensive due to the increase in oil prices.
“Price of chocolate also shot up and it is a luxury product, customers could not put up with the increase, especially as it is not a necessary item.”
Bahraini economist Akbar Jaffari said 75pc of inflation cannot be controlled as Bahrain relies heavily on imports.
“War has created a lot of economic tension and everything is packaged and exported to Bahrain,” he told the GDN.
“However, Bahrain government has been smart in containing the situation with staples like flour, rice and other basic commodities being heavily subsidised and controlled, and the market is under surveillance.
“But once such commodities turn into luxury – like flour turning into cakes and pastries – they are not any more part of the essentials.”
Dr Jaffari also cited the lingering aftermath of Covid-19, which he said, has hit supply chains across the world.
“The cost of shipping, storage and handling have increased by more than 600pc,” he said.
“Rise in prices of commodities in the producing countries’ has also generated internal inflation, which when combined with the increase in cost of logistics compounds inflation. It is unfortunately tough.”
He, however, praised Bahrain government for launching initiatives to boost economic recovery.
“Coming to the solutions, most of the governmental factors are out of our control, but we can actually oppose it by reducing consumption,” he said.
“Normally this is the economic equation that we need to adopt when prices go down and it calls for a collective effort from the government, private sector companies and consumers.
“Cost reduction through lesser consumption is the key, which we have to play smartly and effectively.”
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