• Home
• /
• Economy
• /
• Business

UAE CPI hits 6-year high in August

Abu Dhabi - The biggest contributing factor to the rise in inflation was transport freight and fares, which rose 10.63 per cent during the month.

Consumer prices surged 4.94 per cent in August, reaching its highest level since February 2009.
The UAE National Bureau of Statistics said the Consumer Price Index, or CPI, reached 127.19 points in August from 121.20 points in the same period last year. In a month-on-month comparison, inflation rose 0.92 per cent from 126.03 points in July.
The biggest contributing factor to the rise in inflation was transport freight and fares, which rose 10.63 per cent during the month.
The transport group, an important component tracked by the CPI, has a weightage of 9.7 per cent on the index. It is the third-highest after housing, water, electricity, gas and other fuels group, which has the biggest weightage of 37.9 per cent. The food and beverage group has a weightage of 16.1 per cent.
According to the Bureau, Abu Dhabi reported the highest surge in inflation of 1.22 per cent, followed by Ajman and Fujairah with a rise of 1.01 per cent during the month.
After transport, housing rents contributed 9.85 per cent to inflation and food and soft drinks added 4.94 per cent, according to the bureau.
According to the Dubai Statistical Centre, in August the CPI increased 4.41 per cent annually, compared to 4.21 per cent year-on-year in July, driven mainly by housing and transportation. Both categories contributed 3.75 per cent out of 4.41 per cent.
Transportation increased by a record 9.4 per cent year-on-year, the highest since January 2009.
Its spending accounts for almost 9.1 per cent of household budget, said Alp Eke, senior economist at National Bank of Abu Dhabi.
"There is a huge jump in transportation, due to increase in petrol prices," he said.
Eke expected the transport category to contribute more in the future as the prices are adjusted according to international benchmarks.
At the moment, the oil price is around 54¢ a liter. Petrol prices at the pump increased by 20.6 per cent and airline prices leapt by 34.3 per cent, he said.
Sidharth Chomal Kamal, managing director of Sun Florist Foodstuff Trading at Dubai's Ras Al Khor market, said with the cumulative cut of 32 per cent in two successive revisions by the Ministry of Energy in diesel prices, the freight charges for moving a container have dropped to Dh650 from Dh800, which is a significant relief. However, it is yet to be seen when ordinary consumers will reap the benefits in the retail prices of food.
On September 7, commenting on the decline in oil prices, UAE Minister of Economy Sultan bin Saeed Al Mansouri assured that the inflation would be "under control".
In 2014, he said the country had two per cent inflation, while a year before in 2013, it was hovering around one per cent. He hinted inflation to be in the region of two to 2.5 per cent maximum for the year.
In July, International Monetary Fund forecast inflation to rise to 3.8 per cent in 2015 against 2.3 per cent in 2014. Eke estimated inflation for the year reaching 4.3 per cent on average.
- haseeb@khaleejtimes.com