UAE inflation for May accelerates to 0.9%, fastest in a year

Dubai: Annual inflation in the UAE rose 0.88 per cent in May as food, hotel, transport and education costs inched higher.

On the month, consumer prices were little changed at minus 0.07 per cent, according to the data released. Inflation was at 0.8 per cent in April.

The Consumer Price Index (CPI) hit its lowest point for the year at 114.01 last month, the National Bureau of Statistics said yesterday in an official report on their website.

For the first five months, the CPI rose 0.85 per cent compared to the same period last year when the global economic downturn saw some of its worst months as housing prices and rents tumbled.

Prices of housing, which has a 39 per cent weight in the overall basket, dropped by 0.52 per cent on the month in May, for the second month in a row, after a 0.68 per cent fall in April.

On the contrary, food prices, which account for 14 per cent of the basket, jumped by 1.16 per cent, following a 1.24 per cent increase in April. Transport costs grew 0.46 per cent in May, a slowdown after a 1.12 per cent rise in the previous month.

Communication, medical care, recreation, furniture, clothing and household goods prices remained quite stable.

"I don't see rents recovering, they've pretty much bottomed out. But somehow the downward trend seems reasonable," Eckart Woertz, programme manager for economics at Gulf Research Centre, told Gulf News.

"Restaurants are not in the position to increase prices… it [CPI] reflects the rising farm prices that have crept up again, and have now remained elevated," he said.

Oil prices

With recovering oil prices and a bounce in food prices, the short-term outlook for the region is of low single-digit inflation.

At the emirate level, Umm Al Quwain had the highest inflation rate with 1.42 per cent, while prices in Ras Al Khaimah rose the least at 0.16 per cent.

Abu Dhabi's inflation was 0.28 per cent while Dubai faced an overall increase of 0.78 per cent. Sharjah's inflation fell 1.31 per cent.

The International Monetary Fund expects inflation in the UAE to edge higher to 2.2 per cent this year and 3 per cent in 2011.