Dubai inflation eases in March on lower transport and food costs

Emirates NBD projects softer headline inflation in coming months on lower global oil prices

Food and beverage costs fell in Dubai last month. Victor Besa / The National

Dubai inflation slowed to 2.8 per cent on an annual basis in March, down from 3.15 per cent in February, on the back of lower transport and food and beverage costs.

The price growth was the slowest in the emirate since October last year, according to the latest data from Dubai Statistics Centre.

Transport costs for March fell 3.34 per cent year-on-year and food and beverage costs slid 0.31 per cent. Information and communication as well as clothing and footwear prices also fell during the month.

However, housing, utilities and fuels, which account for the biggest part of the consumer price index at more than 40 per cent, rose 7.16 per cent yearly in March, when compared to 7.36 per cent each in February and March. This was due to the rise in housing prices, as apartments and villa rents continued to increase in Dubai, according to Emirates NBD.

In the first quarter of this year, Dubai apartment rents were up by about 8 per cent on an annual basis while villas and townhouses were up by about 20 per cent, the lender said in a note on Monday.

The costs of education, restaurants and accommodation services, personal care, social protection and miscellaneous good and services also increased during the month.

“Prices were 0.1 per cent lower compared with February, marking the first monthly deflation since July 2024,” Daniel Richards, senior economist at Emirates NBD, said.

He added that inflation over the first quarter averaged 3 per cent year-on-year, “slightly more than our 2025 forecast of 2.8 per cent, but we expect that price growth will be more modest through the remainder of the year than we have seen in first quarter”.

Emirates NBD projects softer headline inflation in the coming months "largely on the back of lower global oil prices, which have already come down sharply in April".

"This will be reflected in prices at the pump and in the transport component of the basket, which accounts for just over 9 per cent of the total," Mr Richards said.

The latest data comes as Dubai's economy continues to grow on diversification efforts.

The emirate's economy grew by 3.1 per cent in the first nine months of last year, compared to the same period in 2023, reaching Dh339.4 billion ($92.4 billion), with growth largely driven by strides in several sectors, according to a report in February by state news agency Wam.

The wholesale and retail trade sector reached Dh83 billion in the first three quarters of last year, a growth rate of 2.9 per cent. The transport and storage sector grew by 5.3 per cent to reach Dh42 billion, while the financial and insurance activities sector increased by 4.5 per cent to reach Dh39.4 billion.