Dubai's inflation eases despite higher rents

The emirate's inflation eased to 3.32% in July, its lowest this year

Food and beverage prices have continued to rise in Dubai. Amy Leang/The National

Dubai’s inflation rate slowed to 3.32 per cent in July, its lowest so far this year, even as housing costs remain high in the emirate.

Housing, utilities and fuels which account for the biggest part of the consumer price index at more than 40 per cent, rose 6.76 per cent yearly in July, its highest so far this year, according to the latest data from Dubai Statistics Centre.

Transport prices in July also rose by 0.18 per cent annually, compared with 3.32 per cent in June.

“As oil prices have dropped on average in August compared with July, transport may again be a drag on inflation in subsequent estimates. On a monthly basis, the CPI index fell by 0.1 per cent month on month,” Emirates NBD said in a research note.

Prices of restaurants and accommodation services fell by 0.31 per cent annually in July, compared to a rise of 0.79 per cent in June, according to Dubai Statistics Centre data.

Prices of recreation, sports and culture as well as information and communication also fell.

The prices of furnishings, household equipment and routine household maintenance also affected the consumer price index, which rose 0.35 per cent last month, compared to a rise of 0.68 per cent in June, the latest data shows.

Food and beverage prices increased 2.46 per cent annually compared to 2.35 per cent in June, while tobacco prices dropped.

Education prices recorded an annual increase of 3.7 per cent and remained unchanged from the previous month.

Dubai’s property market has been booming in recent years on the back of government initiatives such as residency permits for retired and remote workers and the expansion of the 10-year golden visa programme.

Overall growth in the UAE’s economy due to diversification efforts is also supporting the property market.

Both rents and property prices increased in the emirate during the second quarter, according to the latest report from Asteco.

Gold Souk in Deira. Dubai’s economy grew by 3.2 per cent annually in the first quarter of 2024. Pawan Singh / The National

Apartment and villa rental rates increased by 3 per cent and 2 per cent, respectively, during the period, while the average property prices rose 2 per cent, property management company Asteco said this month.

The surge in global wealth creation has also significantly affected the Dubai real estate market. As affluent people seek to diversify and secure their assets amid geopolitical volatility, Dubai has emerged as a prime destination, according to real estate broker Betterhomes.

The latest data from the Dubai Statistics Centre comes as the emirate's economy continues to grow amid diversification efforts.

Dubai’s economy grew by 3.2 per cent annually in the first quarter of 2024, with Dh115 billion ($31.3 billion) added to the emirate’s gross domestic product during the period, driven by the expansion of the transport and storage sector, as well as the financial and insurance industry.

The growth continues the momentum from last year when the emirate's economy grew by 3.3 per cent annually to Dh429 billion, the government said last month.

Inflation in the UAE declined to 1.6 per cent last year from 4.8 per cent in 2022, on the back of lower energy prices, which led to a decline in transportation prices of 5.6 per cent during the period, according to the UAE Central Bank report in June.