UAE Supermarkets Warn ‘Not Realistic’ to Absorb All Cost Hikes as Diesel Prices Jump 70%

Retailers struggle to shield consumers from soaring fuel costs amid regional conflict; Choithrams and Al Maya Group say margins under pressure

DUBAI – Major retailers in the UAE have warned that while they are doing their best to absorb rising operational costs, it is “not realistic” to fully shield consumers from the impact of a sharp surge in diesel prices.

The UAE hiked fuel prices for April, with petrol rising by Dh0.80 per litre and diesel jumping more than 70 percent – from Dh2.72 to Dh4.69 – driven by higher global oil prices amid the ongoing US-Israel-Iran conflict.

Higher diesel prices directly affect the bottom lines of transport, logistics, retail, and other industries. Some companies absorb these costs, while others pass them on to consumers. Retailers may adjust certain prices to protect customers on essential goods while increasing others to safeguard margins.

‘Growing Pressure’ on Supply Chains

Al Maya Group said it is experiencing growing pressure from rising diesel prices, highlighting the direct impact on transportation, logistics, and supply chain costs across the retail sector.

Kamal Vachani, Deputy CEO, Partner and Group Director of Al Maya Group, said that while the company is committed to absorbing costs through internal efficiencies, a sustainable long-term solution requires a balanced, customer-focused approach.

“We remain dedicated to protecting our customers’ interests by managing costs responsibly, ensuring that value, affordability and product availability remain at the heart of everything we do,” he added.

‘Not Realistic to Say All Costs Can Be Absorbed’

Choithrams, another major UAE retailer, said it will continue to absorb as much as possible through better planning, tighter operations, and supplier collaboration.

Mark Mortimer-Davies, CEO of Choithrams, outlined several initiatives already taken to reduce costs and improve sustainability.

“We have removed returns to many suppliers, eliminating double journeys. We have also invested in route planning software to ensure our trucks leave warehouses fully loaded and follow the most cost- and time-efficient daily routes. Through these initiatives, we will try to absorb as much of the increased costs as possible,” he said.

However, he added: “It would not be realistic to say that all cost increases can be fully absorbed. Where pressures persist, some of those costs will inevitably be passed on. Our priority is to remain disciplined, keep any increases measured, protect key everyday items, and continue offering value and quality wherever possible.”

Margins Under Pressure

Higher diesel prices feed directly into the cost of moving goods, whether through imports, warehouse transfers, or daily store deliveries. For retailers, this increases the overall cost of operations.

Choithrams said the immediate impact is pressure on margins. Over time, it can influence pricing, product availability, and delivery frequency. As a result, the focus shifts to efficiency – with fuller trucks, fewer trips, and more centralised distribution to manage costs.

Despite the challenges posed by the regional conflict, Al Maya Group reaffirmed its commitment to maintaining product availability across all its outlets.