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29 March 2024

Abu Dhabi inflation at 2.5% in H1

Dubai Statistics Centre monthly consumer price data last week showed March inflation falling to 4 per cent due to a fall in food prices. (REUTERS)

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By Staff

Higher food prices allied with costlier transport and communication to boost inflation in Abu Dhabi by 2.5 per cent in the first half of 2011 but the rate remains dwarfed by record inflation during the oil boom of 2007-2008.

According to government data, the 2007 consumer price index rose to 120.9 points in the first half of 2011 from 117.9 points in the first half of 2010.

Food and non-alcoholic beverages were the main factor in inflation as they contributed by 53.1 per cent to the price increase, showed the figures published by the Abu Dhabi statistics centre this week.

Another key inflation driver was the transport sector, which contributed by 34.1 per cent, and the communication services which contributed by 14 per cent.

The increase was offset by clothes and footwear, which plunged by nearly 16 per cent in the first half of 2011, the report showed.

Analysts believe inflation in Abu Dhabi would remain relatively low this year despite a pick-up in the economy, citing falling rents and stable prices of food and other consumer items as part of a Dh200-million price-stabilization initiative undertaken by the ministry of economy this year.

Abu Dhabi reeled under record high inflation rates in 2008, when they were close to nearly 15 per cent before they started to sharply decline following the global financial distress in September that year.

Inflation slightly picked up in the UAE and other Gulf oil producers last year as their economies began to recover from the crisis and risk-averse banks were gradually resuming normal lending.

Inflation in the UAE, the second largest Arab economy, dived from 12.3 per cent in 2008 to only 1.5 per cent in 2009 before rebounding to 2.2 per cent in 2010. It is projected by the IMF to climb to around three per cent in 2011.

Abu Dhabi, the largest UAE economy, recorded GDP growth of about 7.6 per cent in 2010 and is expected to grow by nearly seven per cent this year in line with the emirate’s 2008-2012 development plan.

From around Dh517.8 billion in 2010, the emirate’s real GDP is forecast to expand to Dh554 billion in 2011, according to Mohammed Omar Abdullah, undersecretary of the Abu Dhabi Economic Development Department.

His forecasts showed the non-hydrocarbon sector would grow by around 10.6 per cent in 2011 to Dh268 billion from Dh242.4 billion in 2010 to account for nearly 48 per cent of the overall GDP. He said targeted growth in the non-oil sector during the current plan is 8-10 per cent.