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03 March 2024

Abu Dhabi inflation up 3.5%

By Reuters

Abu Dhabi's inflation rate rose slightly in January to post a rise of 3.5 per cent from a year earlier, as food prices accelerated but housing costs were unchanged, data showed on Saturday.

Inflation in the emirate had been edging higher over the past year, peaking at 4.1 per cent in October and November.

Price growth was at 3.5 per cent year-on-year in January, up from 3.3 per cent in the previous month, data from Abu Dhabi Statistics Centre (SCAD) showed.

Record high global food prices are one of the main factors seen fuelling inflation this year in the Gulf which imports up to 90 per cent of its food.

On a monthly basis, Abu Dhabi's January consumer prices grew 0.1 per cent, after a 0.8 per cent drop in December.

"We think inflationary pressure is contained. Our outlook is still for single-digit inflation in part because of slow money supply and credit growth," said Giyas Gokkent, chief economist at National Bank of Abu Dhabi.

"The rent category will continue to have a moderating effect on CPI because of additional supply."

Housing and energy costs, which have a 38 per cent weighting in the Abu Dhabi basket, were unchanged on a monthly basis.

Food prices, which account for more than 16 per cent of the basket, rose 0.4 per cent month-on-month in January, after a 1.9 per cent drop in the previous month.

"Globally, the story is around food prices going up, for instance in wheat. The rice harvest seems to be good, but certain food categories such as wheat are a problem."

Inflation in the UAE - the second largest economy in the Arab world - should remain at around 2 per cent this year, Economy Minister Sultan bin Saeed Al Mansouri said this month.

In a Reuters poll in December, analysts had forecast an average inflation of 2.8 per cent this year.