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Dubai Inflation Falls to 5-year Low

“Looking ahead, from a business perspective, a drop of inflation will increase the competitiveness of the UAE and attract more business start ups,” Dubai Chamber said in a statement.

Quoting data from the Dubai Statistics Centre, the statement said that inflation, the pace of change in consumer prices, sharply went down to 4.1 per cent in 2009, compared with 11.3 per cent in 2008, which was the highest in over 20 years on the back of a surge in house rents and food prices.

“This trend has clearly reversed in 2009 due to the resurgence in the US dollar, falling commodity prices, a correction in the real estate sector and weakening domestic demand,” the statement said.

A breakup of the Dubai General Consumer Price Index (CPI), according to the Dubai Chamber statement, showed that the housing, water, electricity, and gas and fuel expenditure group, which accounts for 43.7 per cent of the index weight rose just 2.4 per cent in 2009. Telecommunications dropped the sharpest, down 0.17 per cent, and the steepest rise was recorded by education expenditure at 18.6 per cent.

Dubai Chamber said that the combination of falling rental and property prices will leave individuals and businesses with more disposable income.

“This strong drop in rental accommodation, commercial real estate and warehousing, will certainly have further positive implications for doing business in Dubai in 2010,” it said.

The global financial crisis that started in 2008 ended an oil- and real estate-fuelled boom in the Gulf Arab region, pushing consumer price growth down from 2008 record peaks, with some countries such as the UAE experiencing temporary deflation in 2009.

The UAE, the world’s third largest oil exporter, registered annual inflation of 1.56 per cent last year, final data showed, down from a record high of 12.3 per cent in 2008. Consumer prices fell 0.42 per cent on an annual basis in December, after 0.17 per cent growth in the previous month, final data from the National Bureau of Statistics showed, confirming preliminary estimates. On the month, prices decreased 0.71 per cent in the last month of 2009, after rising 0.41 per cent in November, due to a decline in the household category, the data showed. 


abdulbasit@khaleejtimes.com