The second-largest Arab economy signed agreements with supermarket chains across the country last week to offer discounts of up to 60 percent on more than 200 food items during Ramadan, said Hashim Saeed al-Neaimi, the manager of consumer protection at the UAE's Ministry of Economy.

"The economic crisis has affected consumers' pay and we want everybody to be able to afford the majority of food items during Ramadan," al-Neaimi told Reuters in an interview.

The economic crisis has hit the emirate of Dubai harder than the capital of Abu Dhabi. Hundreds of billions of construction projects have been put on hold in Dubai, and many have lost their jobs or taken pay cuts.

Construction labourers are among the country's poorest paid.

Concerns about food price manipulation typically emerge during Ramadan, and the following Eid holiday, due to higher demand.

Ramadan, when Muslims fast from sunrise to sunset, is slated to begin on Aug. 21. During the month, consumer spending on food items increases, said al-Neaimi.

The UAE has expanded the initiative to cut prices on more products after encouraging lower prices for the first time last year, Neaimi said.

Abraham George, a store manager at Baniyas Cooperative Society supermarket in Abu Dhabi, said the drop in prices would be short-lived.

"Items such as sugar, oil and rice will be sold at cost value during Ramadan, but after the month is over, everything's  prices will go back to normal," he said.

"It's a short term dropping of prices so it will not really harm business, but I think it will encourage people to spend more which is a healthy sign for our survival."

In April, the UAE said it would move to cut the fixed cost of basic food items after a slump in global commodities prices.

The emirates fixed prices of some basic foodstuffs last year at 2007 levels to curb inflation which was then at a 20-year peak.