Abu Dhabi: The annual rate of inflation in Abu Dhabi emirate fell to a two-year low of 1.9 per cent in 2011 from 3.1 per cent the previous year, Statistics Centre Abu Dhabi (SCAD) said on Wednesday.
"The main group that slowed down the rise in consumer prices during 2011 compared with 2010 was clothing and footwear, which contributed a negative 67.4 per cent of the overall change in the consumer price index (CPI).
"The average prices of this group decreased by 13.8 per cent," SCAD said in a statement.It added: "During 2011, consumer prices for national households increased by 1.9 per cent, and by 1.6 per cent for non-national households and 3.4 per cent for collective households."
The data showed that, from December 2010 to December 2011, average consumer prices rose 1.2 per cent. From November to December 2011, average consumer prices decreased 0.2 per cent.
The inflation rate for the fourth quarter of 2011 compared with the fourth quarter of 2010 was 0.9 per cent.
The food and non-alcoholic beverages group accounted for 67.7 per cent of the percentage point rise in the index, mainly due to increases in the prices of coffee, tea and cocoa subgroup which rose 15.3 per cent, followed by meat (14.7 per cent), mineral waters, soft drinks, fruit and vegetable juices and fruits (8.6 per cent) for each, and fish and seafood (7.4 per cent).
Housing, water, electricity, gas and other fuels together made for the next highest group contributing to the overall increase in the consumer price index, at 31.9 per cent.
Giyas Gokkent, chief economist with National Bank of Abu Dhabi, told Gulf News: "In terms of domestic factors affecting inflation, the housing and utilities category has a 37.9 per cent weight in Abu Dhabi's consumer price index and is the largest component. The rise in the supply of housing in the emirate has led to a decline in rents since 2008 and this will continue to moderate the overall index."
He added: "Meanwhile, slower economic growth has meant that demand pull price pressures are relatively absent.
"This can be seen from money and credit growth which is in single digits and the pace of broader economic activity.
"Wage pressures have also moderated, the recent federal salary hike to employees in judiciary, education, and health sectors notwithstanding."
Gokkent said the global economic backdrop is also disinflationary.
"Fears about the break-up of the euro have meant strengthening safe haven currencies. The US dollar remains the world's primary reserve currency and has benefited from rising risk aversion. The strength of the US dollar to which the dirham is pegged will reflect as a disinflationary factor in the near term for the regional economies," he said.
He said global food prices also eased from their peak in February 2011.
"Forecasts point to subdued price pressures in 2012 given that the factors alluded to above are likely to persist in the near term," he said.
