Abu Dhabi inflation rate down to 3.2% in July as rise in food prices slows

Expenditure on housing accounts for about 40 per cent of total consumer spending. Mona Al Marzooqi / The National

The rate of inflation in Abu Dhabi fell to 3.2 per cent in July, down from its five-year high of 3.8 per cent a month earlier, as food price inflation slowed.

The cost of food rose at an annualised rate of 0.5 per cent in July, compared to an annualised rise of 2.3 per cent before Ramadan, said Statistics Centre Abu Dhabi (Scad).

Significantly, despite the dip in July, inflation in Abu Dhabi remained above the IMF’s estimate for inflation this year, which stands at 2.2 per cent. It was also at 2.8 per cent for the first seven months of this year compared to a year earlier.

The majority of the year-on-year price increases were accounted for by a rise in the cost of housing and utilities, which rose 4.4 per cent.

Expenditure on housing accounts for about 40 per cent of total consumer spending, according to Scad.

The cost of furnishings and household maintenance, which accounts for about 5 per cent of consumer spending, and is a measure of activity in the housing market, increased 12.9 per cent.

But the headline figure for housing cost increases disguises variations in price changes for different types of property.

JLL, the house price consultancy, said that sale prices for residential apartments increased by 28 per cent over the past year.

Average rental prices for apartments increased by 15 per cent compared to 2013, as the impact of the removal of the rental cap was felt.

Villa sale prices increased by about 27 per cent, year-on-year, while rents rose by some 6 per cent.

But commercial rents for both retail and office space remained largely static over the past three months, JLL said.

Rents fell slightly year-on-year – to Dh1,820 per square metre, down from Dh1,900 per sq metre the previous year.

Annualised inflation affecting the top 20 per cent of earners stood at 3.5 per cent, while inflation for those in the bottom income quintile stood at 2.1 per cent.

The IMF predicts that inflation will rise to 3.9 per cent in 2019, and that the UAE will record economic growth of 4.4 per cent this year, and 4.2 per cent in 2015.

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