Dubai: Annual inflation rate in Dubai rose to 2.74 per cent in the first six months of 2014 according to data from Dubai Statistic Center (DSC). Inflation rate in emirate was 1.6 per cent during the same period last year.
Housing and utility costs, which account for almost 44 per cent of consumer expenses rose 4.58 per cent year-on-year and 0.2 per cent month-on-month in June.
Inflation in housing sector increased as rents surged by 5.03 per cent and gas prices increased by 11.89 per cent during the first half of the year.
While cost of education increased by 4.43 per cent, food and non-alcoholic beverages group surged by 3.36 per cent. Cost of furnishings, household equipment and routine household maintenance group was by 2.53 per cent in the first half of the year.
Food and beverage prices, which account for 11 per cent of the basket, increased 2 per cent on an annual basis and 1.7 per cent from the previous month.
Prices of food and non-alcoholic beverages increased by 3.36 per cent in the first half of the year. As a result of an increase in the prices of fish and seafood by 20.13 per cent and the prices of meat by 2.68 per cent, prices of Food products surged by 2.21 per cent.
Earlier this month the international Monetary Fund (IMF) in its Article 4 Consultation with the UAE said inflation is projected to increase, driven by higher rents. The IMF has forecast UAE inflation rate at 2.2 per cent and 2.5 per cent for years 2014 and 2015, respectively and has warned that the strengthening real estate cycle, particularly in the Dubai residential market, could attract increased speculative demand leading to higher inflationary pressure..
Apart from housing costs, consumer prices in Dubai were also driven by price increase in restaurants and hotels group by 2.19 per cent, health care by 2.16 per and miscellaneous goods and services group by 1.76 per cent, the DSC report said.
The June UAE purchasing managers index (PMI) showed overall input prices rose in June, with the rate of cost inflation picking up noticeably in June. Analysts said at the current level of economic growth the country is bound to have higher inflation as Dubai is witnessing a strong rebound in real estate and construction sectors. Although the housing cost is the major driver of inflation in Dubai, going forward rising demand is likely to drive input prices.
