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UAE Prices Up after Four-month Fall

DUBAI - UAE consumer prices rose in November year-on-year, the first time in four months, though analysts said a weak property market is expected to cool sharper rises going forward.

The global financial crisis ended an oil and real estate-fuelled boom in the Gulf Arab region, depressing consumer prices from last year’s record peaks, with some countries such as the UAE experiencing some temporary deflation.

The UAE’s consumer prices rose 0.17 per cent in November on an annual basis, official data showed, after falling 0.41 per cent in the previous month, the economy ministry’s web site showed.

On the month, inflation was 0.41 per cent in November following a fall in the index of 0.1 per cent in October.

“The month-on-month data already shows food prices starting to increase in October and November. The dollar weakness against the euro and Asian currencies will likely drive imported inflation,” said Monica Malik, senior economist at EFG-Hermes.

“However, given the substantial oversupply of housing in Dubai will likely limit the increase in inflation in 2010, the UAE is forecasted to see weaker inflation growth than some of its regional peers,” she said.

Food prices rose 0.7 per cent in November, while housing prices were flat, the data showed.

The UAE, the second largest Arab economy, is expected to see average inflation of 1.1 per cent this year and 2.9 per cent in 2010, well down from a record 12.3 per cent in 2008, a Reuters poll showed last month.

The oil producer’s economy minister said last week he expected inflation to slow to 2 per cent by the end of this year. The release showed average inflation of 1.74 per cent for January-November.