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Covid tames UAE inflation

Dubai - Dubai Statistics Centre data showed that the annual general consumer price index fell by 3.34 per cent in April 2020 compared to the same period in 2019.

Overall inflation in the UAE witnessed a considerable decline of 3.34 per cent during the first four months of 2020 as the Covid-19 pandemic impacted consumer demand and economic growth. However, prices of some basic commodities including food and beverages (F&B) rose due to transport restrictions in the wake of the coronavirus outbreak.
Latest reports indicate that inflation will remain muted during the remainder of the year. Data shows that prices of F&B, therapeutic appliances, basic goods and services and personal care items increased while utility charges, transportation, education and household appliances saw a drop due to government initiatives and lower demand.
Work-from-home, distance learning and UAE residents limiting their purchases to essentials led to a decline in transport, household equipment, entertainment and culture, utility and fuel costs, etc. Data also showed that prices of F&B surged 10 per cent while those of basic goods and services rose by five per cent in the UAE during the first four months of the year. The prices of personal care and therapeutic appliances item prices surged by 20 and 25 per cent, respectively.
These figures are lower than some other Mena countries. When prices are compared to other Mena countries, prices in some regional countries such as Jordan, Tunisia and Sudan increased by up to 200 per cent due to the pandemic. However, other Bahrain and Saudi Arabia prevented price changes, said the report.
The UAE reported the first case of coronavirus on January 29 and the number of total cases increased to 25,063 on Tuesday with 10,791 recoveries and 227 deaths.
Anurag Chaturvedi, CEO of Chartered House, said falling prices in March and April are likely to drag the inflation rate further down during the remainder of the year, far below last year average.
"The meltdown in oil prices will likely cause energy prices to end the year down. A coronavirus-induced slowdown in the UAE economy has resulted in some significant price declines," said Chaturvedi.
"There is moderate decline in car and truck rental charges by 10-15 per cent. New-car prices are likely to trend down a bit because of lower demand. Fashion and apparel prices have softened, as inventory piles up. Insurance companies are offering rebates/offers for general insurance categories, which lowers the price index. Even after lockdowns are lifted, spending at restaurants will likely be hurt by both virus concerns and lower consumer willingness to splurge on something that is not a necessity, so menu prices will not rise," he added.
But there are exceptions such as food prices, households, electronics, social media, technology prices are experiencing increase and will continue to rise in the second half of the year, said Chaturvedi.
Locally, the latest data released by Statistics Centre - Abu Dhabi on Wednesday also showed that consumer prices increased 0.9 per cent in April to 108.6 points in April 2020, up from 107.6 points in March 2020. Average consumer prices declined by two per cent during January to April of 2020, the report said.
"UAE consumer prices weaken with Covid-19. Inflation reflects the impact of the pandemic on the real economy," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
Dubai Statistics Centre data showed that the annual general consumer price index fell by 3.34 per cent in April 2020 compared to the same period in 2019.
Prices of housing, water, electricity, gas and fuel division decreased by 6.30 per cent, transportation sector by 12.34 per cent, the entertainment and culture section by 11.41 per cent, clothing and footwear by 6.44 per cent.
While the consumer price index for food and beverage increased six per cent, education section by 1.87 per cent, tobacco by 14.90 per cent, the furniture and furnishing section, and household appliances by 0.47 per cent, restaurants and hotels by 0.12 per cent and healthcare by 0.07 per cent.
- waheedabbas@khaleejtimes.com