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Wed 19 Jan 2011 11:40 AM

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Dubai inflation drops to 0.55% in 2010 on housing, food prices

Housing, water, electricity, gas and other fuels fell 1.25% after rising 2.4% a year earlier

Dubai inflation drops to 0.55% in 2010 on housing, food prices
DUBAI INFLATION: The average inflation rate for food and non-alcoholic beverages dropped to 1.9 percent in 2010 from 2.15 percent the previous year

Dubai’s consumer inflation fell to 0.55 percent last year
from 4.03 percent in 2009 as the cost of some items in the Consumer Price Index
fell and the rise for others slowed amid the global credit crisis.

Housing, water, electricity, gas and other fuels fell 1.25
percent after rising 2.4 percent a year earlier, according to an e-mailed
statement from the Dubai Statistics Center on Wednesday. The average inflation
rate for food and non-alcoholic beverages dropped to 1.9 percent in 2010 from 2.15
percent the previous year. Clothing and footwear tumbled to 0.44 percent from
9.86 percent in 2009.

"The economy is recovering but growth is still weak,
the credit market is flat and rents have fallen sharply," said Simon
Williams, the Dubai-based chief Middle East economist at HSBC Holdings.
"Wages are flat and credit growth is very low. That is not an inflationary
environment."

Dubai, the second-biggest member of the United Arab
Emirates, was helped by Abu Dhabi after the global financial crisis
depressed property prices by more than half, and a credit shortfall forced some
state-owned companies to delay loan payments.

Crude gained about 15 percent in 2010 after tumbling 54
percent in 2008. Oil traded at more than $91 a barrel on Wednesday. The UAE,
which is home to about 7 percent of the world’s oil reserves, is the
third-largest member of the Organization of Petroleum Exporting Countries. More
than 92 percent of the federation’s reserves are in Abu Dhabi.