Education lifts Dubai inflation to 0.5%

Higher school fees helped power a modest increase in Dubai's consumer prices, the Dubai Statistics Centre says. While overall prices rose by just 0.5 per cent in the year to the end of last month, education costs rose by 12.2 per cent, the most of any category in the basket of goods and services the government body tracks in its monthly inflation index. Parents have protested recent tuition hikes at the emirate's schools, saying they were out of sync with lower salaries and benefit packages at Dubai-based companies in the wake of the sagging global economy. A group of parents with children enrolled at the Dubai Modern High School, which is owned by the GEMS group, rallied in January against a planned tuition increase of between 90 and 110 per cent.

Dubai's Knowledge and Human Development Authority (KHDA), which regulates educational institutions, in March responded to distressed parents, saying it would freeze tuition at Dubai's schools this year. But a government official said in May that some schools would still be allowed to increase their fees. "All of us must equally share the enormous responsibility to make sure that the children of Dubai do not have their education disrupted because of the economic downturn that has swept the world," Mohammed Darwish, the head of the regulations and compliance commission at the KHDA, said in a letter announcing the tuition freeze.

But while education costs jumped, that rise was largely offset by declines in communications and housing costs, keeping Dubai's overall inflation rate low. Communications costs fell 10.6 per cent as du, the smaller of the UAE's two telecommunications companies, offered cut-rate services and gained market share against Etisalat. Du, founded in 2007, added 266,000 mobile subscribers in the first quarter of the year. Etisalat lost 30,000 users in that period, but staged a reversal in the second quarter, saying on Sunday it added about 90,000 subscribers.

While Etisalat has a near monopoly on internet and television services across the country, du said earlier this month it reached a deal with regulators to sell services on Etisalat's networks, setting the stage for further price declines as the companies compete for customers. Du announced a promotion starting in August in which it is offering an internet, TV and landline package for Dh249 (US$67.84) a month; a similar package from Etisalat is priced at Dh399 a month.

Today's modest overall inflation numbers for Dubai follow the release on Sunday of midyear statistics for Abu Dhabi. Higher education, housing and food costs there pushed the emirate's rate to 3.4 per cent for the year to the end of last month. Housing costs, which have the largest weighting of any category in the capital's price index, increased 6.1 per cent for the period. The same category in Dubai, meanwhile, declined by 1.65 per cent. Analysts say house prices and rents fell by as much as half in some areas of Dubai last year.

First-half inflation numbers for the whole of the UAE are expected soon. Yearly inflation last year stood at 1.5 per cent, the lowest it has been since 2000. [e-mail]