UAE inflation at one-year high

The UAE’s annual inflation rate stayed at a one-year peak of 0.9 per cent for the fourth straight month in August, but rose at the fastest monthly pace in 11 months on a food price jump, data showed on Thursday.

Prices fell for months in the world's third largest oil exporter last year, under pressure from the global crisis.

Consumer prices grew 0.5 per cent month-on-month in August, after a 0.3 per cent increase in July, data from the National Bureau of Statistics showed.

"This is very benign inflation," said John Sfakianakis, chief economist at Banque Saudi Fransi. "Transportation costs (rise) have come down ... and on the food side we see global and regional food inflation rising."

The food component, which accounts for 14 per cent of the UAE basket, soared 2.0 per cent month-on-month, the sharpest rise this year, after staying flat in the previous month.

Food inflation traditionally climbs up during the holy month of Ramadan, which ended in mid-September, when families enjoy larger and more elaborate meals after daylight fasting.

Transport cost growth, the third largest basket component with a 10 per cent weight, slowed to 0.6 per cent from July's 3.5 per cent, when it was boosted by a gasoline price hike.
 
The housing and energy item, which accounts for a hefty 39 per cent of the basket, was flat on a monthly basis, reflecting  weakness in the real-estate market, where inflows of new residential units keep prices low.

Inflation in Abu Dhabi, which accounts for 10 per cent of the world's oil reserves and more than 60 per cent of the UAE economy, shot up to 3.6 in August, its highest in at least 20 months.

In Dubai, inflation stayed subdued in August, at 0.8 per cent.

In a June Reuters poll, analysts expected UAE inflation of 1.8 per cent this year, after a nine-year low of 1.6 per cent last year.
 

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