Inflation in the UAE climbed to a three-month high of 1.4 percent on an annual basis in May and edged up from the previous month as food prices continued to soar, data showed on Saturday.
Consumer price growth in the world's No. 3 oil exporter floated around 1 percent for most of 2010 after debt troubles at Dubai state-owned firms knocked the economy.
Inflation has remained low this year, at 1.1 percent in April, as banks remain hesitant to lend despite inflows of deposits to the OPEC member, seen as a relatively safe haven after unrest rocked nearby Bahrain, Oman and Yemen.
On the month, living costs rose 0.2 percent in May after five monthly declines in a row, data from the National Bureau of Statistics showed.
Analysts polled by Reuters in March expected average inflation in the second largest Arab economy to quicken to 2.5 percent in 2011 from 0.9 percent last year, which was the lowest annual level since the Gulf war started in 1990.
Food costs, which account for 14 percent of consumer expenses in the $298 billion UAE economy, jumped 1.3 percent month-on-month in May, the same pace as in the previous month, the data showed.
Concerned about the regional turmoil, the UAE government has promised to spend $1.6 billion on infrastructure in less developed northern emirates, raise military pensions by 70 percent and subsidise bread and rice.
It also called on retailers to offer discounts of up to 50 percent in the Muslim holy month of Ramadan, which begins in August, when food prices usually surge as families enjoy more elaborate evening meals after the daylight fasting.
In May, the UAE said it planned to combat rising global commodity prices by fixing the cost of about 400 foodstuffs and household products at 70 outlets.
Housing prices, the largest basket item with a 39 percent share, fell 0.1 percent on a monthly basis in May in a sixth consecutive decline as the property sector remains weak. Transport costs rose 0.1 percent, slightly slower than in April.
In March, the Gulf country's central bank governor said inflation was not a worry, adding that consumer price growth should range around very low single-digit rates.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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