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[Noor]

Abu Dhabi sees the lowest inflation rate in UAE at 1.76%

Nadim Kawach on Monday, August 10, 2009
Emirates Business 24/7

Abu Dhabi recorded the lowest inflation rate in the UAE in the first four months of 2009 as a sharp fall in the prices of food stuffs and other goods and services depressed the rate to one of its lowest levels, official data showed yesterday.

Inflation in Abu Dhabi, the main oil and gas producing emirate in the country, stood at only 1.76 per cent during January-May this year, nearly a third of the inflation rate of 4.94 per cent recorded in the UAE during that period, showed the Ministry of Economy figures.

Ras Al Khaimah, the fourth largest emirate, emerged with the second lowest rate of 2.27 per cent, while inflation in Dubai stood at 5.45 per cent.

It was estimated at 5.78 per cent in Fujairah, 6.02 per cent in Sharjah and as high as 7.6 per cent in Umm Al Quwain.

The report showed the general consumer price index increased by 4.94 per cent in the UAE in the first four months of this year. It gave no estimates for emirates for the first half but inflation for the whole of the UAE averaged about 3.4 per cent, far lower than the record rate of 12.3 per cent in 2008.

A breakdown for items include in the CPI showed the decline in inflation in Abu Dhabi was caused mainly by a 5.07 per cent fall in recreation and cultural services, and a drop of about 1.32 and 0.5 per cent in furniture and other items, and the prices of food and beverage. Housing moderated to around 6.9 per cent in the first four months from as high as 14 per cent through 2008.

There were also slight increases ranging between 0.03 and four per cent in hotels and restaurants, other goods and services, medical care and health services, clothing and footwear and transportation. Education services recorded the highest increase of about 11.06 per cent.

In Dubai, housing recorded a slower growth of around 2.62 per cent but a much higher rise of nearly 22.5 per cent in education, 12.9 per cent in clothing and footwear, and over eight per cent in hotels and restaurants, alcohol and beverages, and food and non-alcoholic beverages. The report showed communication was the only CPI component to record growth of below one per cent in Dubai, rising by only around 0.11 per cent.

Both Dubai and Abu Dhabi were the main cause of high inflation in the UAE during 2007 and 2008 because of an upswing in domestic demand, a surge in the import bill because of higher global prices of goods, a sharp growth in rents, and a weakening of the US dollar, to which the UAE dirham is pegged.

"Abu Dhabi and Dubai account for more than two-thirds of the UAE economy and business activity� it was normal that they were the main drivers of inflation in the country over the past two years," An Abu Dhabi-based economist said. "Other emirates also contributed to high inflation but because of more domestic than external factors given their relatively low imports and business activity."

Figures released by the Ministry of Economy last week showed the UAE is heading for a sharp decline in inflation through 2009 due to waning domestic demand, lower rents and prices of commodities.

The CPI stood at 114.24 in the first half of this year compared with 110.49 in the first half of 2008, an increase of 3.40 per cent. In June, the CPI slipped by 0.03 per cent to 113.05 from 113.08 in June in 2008 although it was slightly higher in June over the previous month.

"The inflation rate in the UAE averaged 3.4 per cent in the first half of this year compared with the first half of 2008," the Ministry said.

"The increase in consumer prices in the first half of 2009 was a result of a rise of 2.7 per cent in the prices of food and beverage, 9.7 per cent in educational services and 11.3 per cent in liquor."

In a recent study, the Saudi American Bank said the UAE could have a brief period of deflation in some months this year before a recovery in domestic demand and higher import bills push the country back into price growth.

http://www.business24-7.ae/Articles/2009/8/Pages/09082009/08102009_391aefafbef4414a91544fcff56b14b0.aspx

[SaharaDesert]

That's good news for those of us who will be in AD this year !

Thanks for the information.

[veiledsentiments]

Does anyone anywhere in the world pay any attention to any government's inflation numbers? The US numbers are pure fantasy and have been for many years now.

At least rents are down in AD...

VS

[Noor]

Of course people of all kinds pay attention to official govt data, as much for what it says as for what it doesn't say. Do you have a source for more "accurate" inflation data? If so, please share.

[15yearsinQ8]

noor, how many of your 89 posts are throwing a current news article on the board without comment?
stop cluttering the boards with these posts
or at least be VERY selective and timely (as in not daily)

[Noor]

Not that many, actually. Sorry if they bother you.

[ifychris]

Come on now, folks, stop the bickering! Govt eco stats(news) are generally designed to do just that......NEWS. Its accuracy and relevance are function of:
Who's collecting it
Purpose of Collection
When collected (time-line and timing)
The only useful info for the ordinary person would be specific price trends/changes.
Don't read too much into it!

[Sheikh N Bake]

US government accounting procedures for calculating inflation may well be byzantine but I seriously doubt that they lie about it. ("Fantasy" implies arbitrary lying.) Reporters have access to what's called the Freedom of Information Act. Any WSJ reporter would soon expose the lies. Let's leave those assumptions to the likes of the Iranian gov't and Ahmeninejad ("Our country is the world's most stable...", everything is wonderful, everyone is happy, protestors are foreign spies, etc. etc.)

[Never Ceased To Be Amazed]

"Lies, damned lies, and statistices"- Benjamin Disraeli

You can make numbers darn near make any point you want...

NCTBA

[veiledsentiments]

Garbage in, garbage out... a new system of CPI in the US was created under the Reagan administration specifically to weight it against showing true inflation... the whole point being to NOT give those whose raises were based on the CPI the correct amount. This reality is demonstrated by the fact that prior to Reagan, a senior on Social Security could live quite comfortably on their checks - it covered the basics. Now if that is all they have, they might make it as a couple... but once one of them dies, the other goes directly to poverty.

Easy enough to create a way to make the numbers lie... that is what calculators are for.

VS

[uaeobserver]

Inflation of nearly 2 percent in just one quarter......

That makes for 8+ percent over the course of a year, if my economics course taught me correctly.....

Do AD employers provide 8 percent pay raises?

[Never Ceased To Be Amazed]

In my short 4-year tenure with my employer, I've received 41% over my starting pay in pay raises. Short answer: Yes, and then some 9% more

NCTBA.

[Green Acres]

Thanks for the postings Noor. Please send more!!!

[ItsJustMe]

[Never Ceased To Be Amazed]