Roughly 80% of agricultural products are imported, with consumers particularly sensitive to import costs
Inflation is no longer a passing phase – it is fundamentally reshaping grocery behaviour on a global scale. A survey of more than 6,000 consumers across the United States, the United Kingdom, France, Germany, Australia, and New Zealand, and the Middle East found 85% concerned about the impact of grocery inflation and rising grocery prices.
In the UAE, the Central Bank projected overall inflation at 2.3% in 2024 (up from 1.6% in 2023), while food-specific inflation softened from 3.7% in January 2024 to just 0.36% by early 2025 This moderation has eased headline pressure, but price perception and household budgeting remain front of mind for UAE consumers.
This isn’t just sentiment; it is translating into decisive shifts in how people shop and where they spend, as households adapt to ongoing financial pressures.
Cost-of-living pressure
These changes are driven by a potent mix of cost-of-living pressure, continued supply chain disruption, and global tariff uncertainty. Consumers are not only altering their grocery baskets, but they are also rebalancing household budgets and making trade-offs across categories. For retailers, the message is clear: staying competitive and maintaining profitability now means understanding and adapting to a new set of consumer priorities.
While inflation anxiety spans regions, perceptions of what’s driving it vary considerably, making it harder for retailers to align pricing and messaging with shopper perceptions. Nearly half (49%) of consumers blame newly introduced tariffs as the leading cause, with others pointing to the rising cost of raw materials (42%), higher labour costs in manufacturing and food processing (39%), or higher supplier and brand margins (33%).
Sensitivity to import costs
In the UAE, where roughly 80% of agricultural products are imported, consumers are particularly sensitive to import costs, shipping disruptions, and currency fluctuations as drivers of grocery inflation.
Generation adds another layer as Baby Boomers lean toward labour costs, while younger groups are more likely to cite tariffs. These differences matter, as perceptions shape trust, loyalty, and purchasing behaviour.
The squeeze goes beyond groceries. Spending is being cut in clothing and footwear, electronics, streaming subscriptions, personal care, and household appliances. Surveys suggest that in the UAE, consumers planning to increase spending still outnumber those planning to cut back by 13 percentage points, but discretionary categories such as fashion and electronics remain vulnerable as households protect their grocery budgets. Few consumers are unwilling to make these trade-offs to offset grocery inflation.
This is where Blue Yonder’s AI-driven demand forecasting and inventory optimisation capabilities come in, enabling retailers to maintain availability, anticipate disruption, and adapt in near real-time. Blue Yonder Cognitive Solutions enhance planning speed and agility, while driving faster inventory turns and reducing waste – even as customer needs and business demands evolve.
