Inflation in Dubai falls by 1.5%

Inflation in Dubai dropped to its lowest level in at least a year in January as the cost of food and drink fell. The inflation rate declined to 1.3 per cent on an annual basis in January from 2.8 per cent the month before, data from the Dubai Statistics Centre showed. Inflationary pressures have slowed in the emirate since the global financial crisis hit, after reaching double-digit highs two years ago. But the easing of inflation could be just a blip before rising food costs in international markets lead to a return of inflationary pressures in the emirate, said Tudor Allin-Khan, the chief economist at HC Brokerage in Dubai.

Mr Allin-Khan attributed the decline to excessive price discounting in the run-up to the Dubai Shopping Festival (DSF), which ended last month. "This could be a one-off rather than an overall trend," he said. "DSF may have had some impact due to aggressive discounting by shops, hotels and restaurants." A sharp decline in the property market and a reduction in the cost of imported goods have helped to lower the consumer price index in the past year. Inflation stood at 4.1 per cent in the emirate last year, compared with 0.78 per cent in Abu Dhabi.

January's inflation rate in Dubai was the lowest since records started last year. The cost of food and non-alcoholic drinks in Dubai dropped an annual 2.3 per cent in January, compared with a fall of 2 per cent in December. The cost of housing, electricity and water climbed 1.5 per cent. @Email:[e-mail]