Inflation in Dubai rises 2.8% in June as housing rents go up

Housing costs rose 4.8 per cent year-on-year in June. Jeffrey E Biteng / The National

Dubai consumer inflation edged up by 2.82 per cent last month from a year earlier.

Annual growth quickened from 2.76 per cent the previous month, according to the data released yesterday by Dubai Statistics Centre. On a monthly basis, prices rose by 0.46 per cent from the previous month. That compared with a monthly rate of inflation of 0.18 per cent in the previous month.

Inflation has been rising this year mainly because of costlier residential rents. Housing costs rose 4.8 per cent year-on-year in June, accounting for about 40 per cent of the weighting on the index.

“The inclination is that inflation will increase as rents have gone up, although there is a lag, such to the extent that the rises are not fully reflected in the data,” said Dima Jardaneh, a senior economist at EFG Hermes, the Egyptian investment bank. “An offsetting factor could be that the impact of imported inflation on consumer prices has been contained, given the strength of the US dollar relative to trading partner currencies.”

Emirates NBD, the Dubai-based bank, forecasts inflation to reach 3 per cent this year, its highest rate since before the financial crisis in 2009. Until this year, inflation had remained relatively subdued in Dubai since a debt crisis burst a property bubble that had been swelling. But an acceleration in the economy and a sharp recovery in property prices are gradually pushing prices for goods and services higher again.

Officials have rolled out price controls to guard against food price inflation during Ramadan.

Statistics Centre Abu Dhabi yesterday released data showing that food prices fell by 0.1 per cent during the third week of the holy month, compared to the same period a month earlier.

Prices of fruit dropped by 3.1 per cent during the period, with fish and seafood declining by 1.9 per cent in price. In contrast, pulse prices rose by 1.5 per cent, with the cost of meat, excluding fish, growing by 0.6 per cent.

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