Dubai’s Inflation Rate Edges Up In January

Dubai’s inflation rate rose by 2.17 per cent year-on-year in January, new data from Dubai Statistics Centre (DSC) revealed.

The rise in inflation was mainly driven by the increased cost of education, which grew by 3.99 per cent last month, while housing, water, electricity, gas and other fuel costs also rose 3.87 per cent.

Rates for food and non-alcoholic beverages grew 3.66 per cent while healthcare costs rose by two per cent in January, adding to the general inflation rate hike.

However, the inflation rate for clothing and footwear fell by 2.8 per cent, DSC said.

The inflation rate also rose month-on-month by 0.49 per cent in January. The increase was mainly driven by housing, utilities and fuel costs which grew by two per cent during this period.

Health costs also rose month-on-month by 1.75 per cent while transport and communication costs increased by 0.33 and 0.16 per cent respectively.

Education, alcoholic beverages and tobacco prices remained stable while costs of food and non-alcoholic beverages dropped by two per cent.

Other groups to have seen a decline in prices during this period were clothing, footwear, services, household equipment and restaurants, DSC said.

Rising prices were recorded among other emirates as well with Abu Dhabi experiencing a 2.1 per cent year-on-year increase in consumer prices in January.

Economists have forecast the UAE’s inflation rate to be above four per cent this year, the highest since the record 12.3 per cent in 2008 prior to the crash.

But a surge of inflation could prove tricky for the UAE to contain because its dirham currency is pegged to the U.S. dollar, making it hard for the central bank to tighten policy while U.S. interest rates remain very low, according to Reuters.

Average inflation in the UAE accelerated to 1.1 per cent in 2013, the highest rate since 2009, from 0.7 per cent in 2012, which was the lowest level since 1990.