Consumer inflation in the United Arab Emirates rose 2.2% in June from the same period last year, due to the increasing food prices and the sharp rise in residential rents in Dubai and Abu Dhabi, according to latest figures from the UAE National Bureau of Statistics.
Rising rents and food prices ahead of Ramadan had a huge impact on the Consumer Price Index for June, which climbed 0.4% from May 2014 and 2.2% when compared on an annual basis. These are average figures for the UAE, largely impacted from the inflation in Dubai and Abu Dhabi, according to the National Bureau of Statistics. Housing costs in June were 2.4% higher from last year and up 0.1 % from May 2014. Food and drinks also had higher prices last month, rising 0.7% from May and up 1.7%, compared to the same period last year. Overall, rent and utility costs make up around 40% of consumer expenses, while spending on food and drinks account for about 14% of household expenses.
Inflation in the UAE reached its five-year high, according to latest estimates for June. The expected annual inflation will be 3%, said Emirates NBD, which will be the highest figure since 2009. The constant growth in residential rents will probably influence the consumer price index even further. Rents in Dubai saw another rise in the second quarter of the year, according to the latest JLL report – around 24% up from Q1 2014. Abu Dhabi is also experiencing a rapid rise in the property prices, especially after the rental cap removal in November 2013. However, food prices are expected to drop this month in line with the slight decrease in global prices (1.8% from May). The Ministry of Economy also took measures for guaranteeing reasonable prices of food and beverages during Ramadan.
