Dubai July inflation edges lower, food prices slow

Dubai inflation slowed slightly in July to reach 0.4 per cent year-on-year, the lowest level in three months, as food price growth decelerated and housing costs fell again, data showed on Wednesday.

Annual consumer prices in Dubai, one of the seven United Arab Emirates, fell 0.1 per cent in April after a sharp tumble from record double digit price growth during 2008. The inflation rate picked up to 0.5 per cent in June.

On the month, consumer prices rose 0.1 per cent in July, down from a 0.2 rise in the previous month, the data from Dubai Statistics Center showed.

Prices in Dubai remained in positive territory for the third consecutive month on a monthly basis, following six months of declines.

"The inflation figures reflect the weak economic activity post the Dubai World debt crisis and a slow recovery going forward," said Stuart Culverhouse, chief economist at Exotix in London.

The UAE, the world's third largest crude exporter, and its fellow emirate Abu Dhabi have yet to release inflation data for July.

Dubai, which lacks the oil wealth of Abu Dhabi, took a big hit from the 2008 global financial crisis and its debt crisis late in 2009 has dragged down the overall UAE economy.

Prices for housing and energy, which have a 44 per cent weight in the Dubai basket, fell by 0.1 per cent month-on-month after staying flat in June.

Food prices, which account for 11 per cent of the overall index, rose by 0.6 percent in July, the lowest increase in three months, following a 1.1 per cent jump in June.

Transport prices, the third largest component, leaped 1.8 per cent in July, after a 0.2 per cent rise in June, the data showed.

Inflation in Abu Dhabi, which took a smaller hit from the global crisis despite oil output cuts, reached 3.4 percent year-on-year in June, while it stood at 0.9 per cent for the whole UAE.

The data for the UAE and the individual emirates are not directly comparable as basket weights differ.

In a Reuters poll released in June, analysts expected UAE inflation of 1.8 per cent this year and gross domestic product growth of 2.1 percent, the slowest rate in the Gulf.