Dubai inflation edged down in March, as a strong US dollar and low global food prices cut families’ supermarket bills.
Overall, prices rose at an annual rate of just above 4 per cent in March, somewhat slower than February’s annual rate of just above 4.3 per cent.
Food and drink costs are down 1.9 per cent compared to March 2014. This represents a decline of 1.3 percentage points over the previous month’s annualised rate. Month-to-month food prices were almost flat.
Expectations of rising interest rates in the US have pushed up the strength of the dollar, increasing the purchasing power of the dollar-pegged dirham. This has lowered import costs, making foreign food cheaper.
The dollar has strengthened by about 10 per cent against other major currencies this year, Bloomberg data show.
The United Nations Food and Agriculture Organization said that global food prices are at the lowest they have been for five years. Cereals, meat and sugar are all significantly cheaper than one year previously as a global supply glut pushes down prices.
Housing costs continued to rise, with real estate and utilities prices about 7.5 per cent higher than one year previously. The pace of housing cost rises in Dubai over the past six months has remained steady at around 7 per cent.
The real estate consultancy JLL expects house prices in Dubai to decline this year, and estimates that rents could fall by as much as 10 per cent by the end of December.
Inflation in Saudi Arabia dipped to 2 per cent in March, as housing and utilities prices rose 2.2 per cent. The IMF has cut its growth estimates for the country following the fall of the oil price.
Inflation is likely to fall further, with JLL predicting “subdued growth” in the Riyadh property market over the next year. The Saudi government introduced new regulations that require homebuyers to put down a 30 per cent deposit on new property purchases.
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