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Tue 24 Nov 2009 12:55 PM

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UAE sees fourth consecutive month of deflation

Food and clothing prices lead 0.4% drop in Oct compared to same period in 2008.

UAE's consumer prices fell 0.4 percent in October from a year ago, the fourth consecutive month of deflation in the Gulf state.

The decline in prices was led by cheaper food and clothing, the UAE’s Economy Ministry said on its website on Monday. In the month, consumer prices dropped 0.1 percent.

Lower oil prices have helped reduce inflation in Gulf Arab states this year. Crude dropped to a five-year low in December and is currently trading at $77 a barrel.

It reached a record high of about double that level last year, pushing inflation above 10 percent in most of the region.

“As growth picks up in 2010, the dollar remains weak and interest rates stay at close to zero, I’m expecting a significant pick up in price pressures,” Simon Williams, a Dubai-based economist at HSBC Holdings Plc, said by e-mail. He forecasts UAE inflation of 4 percent next year.

Among the Gulf states, the UAE and Qatar will see the greatest reversal in inflation, from the highest rates in 2007 and 2008 to negative rates this year, EFG-Hermes said in a report on August 27.

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Saad 10 years ago

Deflation is when inflation rates goes below zero. It is not the case. Inflation is at 1.2%. What is happening is a disinflation rather than a deflation. please correct it