Food costs, which account for 11% of the Dubai basket, rose by 2.7% in February
Dubai inflation edged up 0.9
percent on an annual basis in February, the highest level in a
year, as food and transportation costs rose from the previous
month, data showed on Tuesday.
Annual inflation in the UAE member state
hovered below 1 percent for most of 2010, as lending and the
property sector remained weak following debt problems
experienced by some state-owned companies, although trade has
picked up strongly.
Annual inflation stood at 0.4 percent in January.
On a monthly basis, consumer prices in Dubai increased by
0.2 percent in February, after a 0.1 percent fall in the
previous month, data from the Dubai Statistics Centre showed.
The UAE central bank governor said in March he saw inflation
in the country ranging around "very low" single-digit rates.
"Items driving up annual inflation have included transport
because of the rise in gasoline prices, and the food category
has gone up in line with expectations due to global trends,"
said Giyas Gokkent, chief economist at the National Bank of Abu
Food costs, which account for 11 percent of the Dubai
basket, rose by 2.7 percent in February after a 1.6 percent drop
The UAE will start subsidising rice and bread next month to
combat rising food prices, state news agency WAM reported,
adding that the reduction would run from April 1 to the end of
Transport costs rose slightly by 0.2 percent month-on-month
in February, down from 0.3 percent in the previous month.
"The housing category will continue to play a moderating
effect on inflation, but the risk to Dubai CPI is on the upside
because of price pressures in other categories. We project that
the average Dubai inflation rate might be around one percent at
the end of 2011," Gokkent said.
Housing prices, the largest consumer expense at almost 44
percent, dropped 1.2 percent after a 0.1 percent increase in the
Rising living costs in Arab countries are one of the driving
forces behind the revolts that have toppled leaders in Egypt and
Tunisia and are now challenging autocratic regimes in Libya as
well as nearby Bahrain and Oman.
The UAE, the world's third-largest oil exporter, has escaped
the unrest so far. Its small local population has one of the
world's highest economic outputs per capita at over $47,000.
The IMF forecasts Dubai's economy to grow by 2.8 percent
this year, up from 0.5 percent in 2010.