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Wed 7 Mar 2018 01:31 PM

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VAT, excise tax sees Abu Dhabi inflation rise to 4.7%

A number of factors, including selective tax and VAT, contributed to the increase

VAT, excise tax sees Abu Dhabi inflation rise to 4.7%
Abu Dhabi and the Department of Economic Development said the increase of consumer prices inflation in January “is completely reasonable” because of the implementation of VAT.

Inflation in consumer prices in Abu Dhabi rose 4.7 percent in January compared to the same month in 2016, according to new statistics from the Statistics Center Abu Dhabi and the Department of Economic Development (DED).

In its analysis, DED credited the increase to a variety of factors in addition to the implementation of value-added tax (VAT), including the fact that the prices of tobacco and soft drinks increased 100.3 percent due to the implementation of excise (selective) tax in October 2017.

Additionally, the report found that the consumer prices index increased 3 percent in January 2018 compared to the same month in 2017.

The report includes the results of the calculation of the consumer prices index based on welfare level, family type, geographical area, and the contribution rate of the major groups to the prices annual change. The consumer price index included 12 group, eight of which are subject to VAT, three that are not, and one group – residence, water, and fuel – that is partially subject to VAT through some of its components.

DED noted that the increase of consumer prices inflation in January “is completely reasonable” because of the implementation of VAT.

The transportation group contributed 38.5 to the total increase rate in January, with prices going up by 13.2 percent, while the “miscellaneous goods and services” group contributed 17.8 percent of the total, with prices going up 12.4 percent.

The “food and drinks” group was found to have contributed 17.6 percent of the total increase rate achieved in January 2018, with prices in the group going up 7.1 percent.

The “residence, water, electricity, gas and other fuel types” group contributed to a decrease in inflation with a rate of 19.6 percent, which DED notes is a reflection of a 2.7 percent decrease in residential rental rates.

The report also noted that consumer prices for national families increased by 5 percent in January, while consumer prices for non-national families went up 4.4 percent.

Additionally, the Centre noted that Abu Dhabi contributed 54.9 percent of the total price rate index, compared to 37.9 in Al Ain and 7.3 percent in Al Dhafra during the same period.