No official inflation figures for 2007 available

 

Inflation is eating deeper into the UAE's economic body but the nation has yet to publish price data for the past year, giving rise to speculation by foreign institutions on the inflation rates in the Opec oil producer.

More than four months after the end of 2007, the UAE still does not have any official figures on inflation as the latest report was published for 2006 but is still classified as preliminary statistics on inflation.

In contrast, all partners of the UAE in the six-nation Gulf Co-operation Council (GCC) have released inflation figures for 2007 and some of them are even publishing periodical monthly data in 2008, including the Kingdom of Saudi Arabia.

When recently asked about the expected inflation rate in the UAE this year, Central Bank Governor Sultan bin Nassir Al Suweidi said he even did not know the rate for last year.

"I don't want to talk about this issue because I don't know... publishing inflation data is not within our authorisation. You have to ask the competent departments that are responsible for issuing inflation data," he said.

Suweidi was apparently referring to the Ministry of Economy, which monitors the prices of food, rents and other items in the country. While it has just started to publish weekly and monthly data on food prices, the Ministry has not yet developed the facility into a full-fledged data system covering the consumer price index, the globally known tool to monitor general inflation.

The Ministry has not explained why it takes so long to issue information at a time when the need for timely inflation data is crucial.

"The absence of such data is a major obstacle to tackle inflation by the various departments in the UAE," an Abu Dhabi-based economist said. "While the Ministry of Economy is gratefully taking measures to contain the inflation problem, such as fixing the prices of foodstuffs, the timely release of inflation figures is vital for any government seeking to deal with inflation. I still cannot understand this long delay when other Gulf states are already issuing updated inflation figures on annual and even monthly basis."

Other economists believe the delay is due to the fact that the UAE economic and political system is quite different from other GCC countries as it is a federal institution that includes autonomous government agencies in each emirate.

"Probably the delay is because some emirates are late in supplying data," one economist said. "This was the case with the federal budget years ago when it was issued in the middle of the year. But the budget problem has now been resolved and I can't see any reason why the inflation problem is tackled."

In its 2006 report, the UAE Ministry of Economy estimated the inflation rate at 9.3 per cent but more than a year after it was released, the report says the data is still preliminary. For the previous years, the Ministry has fixed the figures as permanent, putting inflation at around 6.2 per cent in 2005.

For 2007, the local and international media have relied mainly on independent estimates, the latest of which were issued by Merrill Lynch. It put the inflation rate in the UAE last year at around 10 per cent and forecast it at 12 per cent in 2008.

But economists believe such figures are inaccurate on the grounds the UAE inflation rate is based on price figures from each of the seven emirates.

"The consumer price index covers too many items, including food, rent, clothes, medical services, education, furniture, tobacco and others. Each emirate has its own pricing system and import-export outlet... For this reason, I believe the Ministry of Economy has to wait for data from the competent authorities in each emirate," one expert said. "But the UAE must tackle this problem soon. Don't forget it will be part of the GCC monetary union, which envisages strong co-ordination on fiscal issues, including inflation."

 

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