Inflation across the UAE dipped to 3.5 per cent in November from 3.7 per cent the previous month, on cuts to fuel prices.
Housing costs remained the biggest driver of inflation, which were up 8.3 per cent against the previous year, unchanged against the previous month. Dubai house prices are up around 62 per cent against their lowest point in February 2011, but have been falling since June 2014.
Real estate brokerage Cluttons expects Dubai house prices to fall by a further 3-5 per cent in 2016 – although property data company Reidin said on Monday that house prices could actually rise in 2016 if developers cut new supply fast enough.
Nationwide house price inflation remained constant as house prices continued to rise in Abu Dhabi.
Transport costs fell 0.9 per cent in November against the previous year, following cuts to the headline pump prices.
Ministry of Finance data indicates that government spending on subsidies has fallen dramatically this year. The government spent Dh6.1 billion on subsidies in the first half of 2014, the data shows, but has spent just Dh400 million on subsidies in the first half of this year.
In the near future “inflation will ease a little further”, said Jason Tuvey, the emerging markets economist at Capital Economics.
“Falling Dubai property prices should hopefully feed through to cheaper rents, in time,” he said. “The stronger dollar has helped to keep a lid on food prices and import prices in general, and we’ve obviously seen commodity prices fall substantially over the past year.”
“And, despite the deregulation of subsidies on fuel, fuel prices have started to edge down in recent months.”
abouyamourn@thenational.ae
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