Dubai: The Central Bank of UAE (CBUAE) projects inflation to reach year on year 3.6 per cent in 2018 but the continued downward trajectory of the housing CPI inflation and the continued easing in labour markets for the remainder of this year will contain inflationary pressures.
The inflation rate, measured by the Consumer Price Index (CPI), rose during the third quarter of 2018 to reach 3.6 per cent compared to an annual increase of 3.4 per cent in the previous quarter underpinned by the increase in oil prices in international markets.
As for 2019, the CBUAE projects that inflation will ease to reach 2.5 per cent, due to some projected softening in oil prices.
Quoting recent data from REIDIN Price Index, the central bank report said the UAE residential market continued to decline in the third quarter of 2018. In Dubai, on an annual basis the property prices decreased by 7.4 per cent and a decline of 2.5 per cent compared to the previous quarter. Residential real estate prices in Abu Dhabi, dropped 6.1 percent year-on-year in the third quarter after a 6.9 percent slide in the second quarter.
In the first nine months of 2018, employment grew at an average rate of 1.6 per cent against a 2.6 per cent increase in the same period of 2017.
“This trend [of slowing property prices and rental yield] is reflecting the impact of softer job market, which continues to weigh in on demand in the housing market,” the Central Bank quarterly said.