Prices at hotels and restaurants in Abu Dhabi surged more than 22 per cent last month compared with June last year as the hospitality trade capitalised on the final month before the summer slowdown and unrest elsewhere in the region.
Hospitality costs rose twice as much as the cost of alcoholic beverages and tobacco, the category with the next highest increase in the consumer price index at 10.7 per cent, according to consumer price inflation data released by the Statistics Centre-Abu Dhabi.
"The hotel markets in Abu Dhabi and Dubai have benefited from the Arab Spring, but that's only part of the story," said Stewart Coggans, the executive vice president at Jones Lang LaSalle Hotels, the hospitality division of the international property services firm.
The hospitality industry in Abu Dhabi was facing pressure from an increasing supply of hotels hitting the market as the emirate expanded its infrastructure, he said.
He pointed to data from Smith Travel Research, an international firm, that showed average daily rates in Abu Dhabi hotels had fallen to US$157 (Dh576) in the first five months of the year from $177 during the same period of last year.
Other elements of the index also moved higher. Food and non-alcoholic beverage prices rose by 4.2 per cent from June last year.
Overall, consumer prices edged up 1.4 per cent, the data showed. But a higher jump in inflation was capped by continued weakness in the property sector, the biggest single contributor to the index.
Prices of housing, water, electricity, gas and other fuels dropped 2 per cent.
Most economists expect inflation rates in the capital to remain muted this year as excess capacity in the housing market weighs on prices.
On a monthly basis, consumer prices rose by 0.2 per cent last month from May. Similarly, hotels and restaurants were the category with the steepest rise, with prices advancing 2.8 per cent.
But consumers in Abu Dhabi have faced less of a squeeze on their wallets this year than those in Saudi Arabia. Official data released yesterday showed annual inflation slowed to 4.9 per cent last month, its lowest level since September last year.
The rate moderated from 5.1 per cent in May. Analysts attributed the drop partly to a decline in commodity prices.
The strength of the US dollar against the euro and other currencies has also helped to control the cost of imports.
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