UAE inflation hits 16-month high

Inflation in the UAE rises as food and transport costs continue to drive up prices.

ABU DHABI, UNITED ARAB EMIRATES -- August 10, 2010 -- People shop for groceries and food at a store in Abu Dhabi. Lee Hoagland / The National
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Inflation reached a 16-month high last month, driven by food and transport costs.

Consumer prices rose to 1.2 per cent last month compared to same period last year, according to data from the National Bureau of Statistics today.

Prices rose 0.9 per cent last month compared to the month previously.

Inflation is expected to slowly edge higher this year after the global financial crisis dragged demand for consumer goods and services lower.

The IMF expects inflation to reach 2 per cent this year before increasing to 2.5 per cent next year as the economy gradually revives.

Hikes in global food prices have buffeted the UAE in recent months. As it imports around 85 per cent of its food, the country is particularly vulnerable to pricing pressures.

In the transport sector, petrol prices have risen twice this year, most recently in July.