UAE Nov CPI flat on housing, food prices soar

United Arab Emirates inflation was largely flat on a monthly basis in November as the costs of housing and transportation fell, while food and goods and services prices rose, the state news agency reported on Sunday.

On the month, price growth stayed at 0.0 per cent in November compared with a 0.6 per cent rise in October, the news agency said, citing a report from the UAE statistics office.

"It reflects that we are seeing very little drivers of upward inflationary pressures," said Monica Malik, chief economist at EFG Hermes in Dubai.

"The ample supply of housing will mean that a very important component is going to be very weak and is likely to have been negative in 2010, although this is not reflected in the data."

Housing prices, which account for over 39 per cent of UAE living costs, dropped into negative territory after jumping 1.2 per cent month-on-month in October.

Food prices, which account for 14 per cent of the basket, rose 0.2 per cent in November compared with 0.4 per cent in the previous month, the report stated.

Consumer prices in the UAE, the world's third-largest oil exporter, had hit an 18-month high of 1.9 per cent in October.

"We've had some increases such as fuel prices that is going to provide some limited push for inflation. Other positive drivers of inflation will be external, such as food prices," Malik said.

UAE inflation dropped to a nine-year low of 1.6 per cent last year, plunging from a record high of 12.3 per cent in 2008, as the global crisis pierced a real-estate bubble in the Gulf state, pushing the second-largest Arab economy into its first recession since 1993.

In September, analysts polled by Reuters expected average UAE inflation of 1.5 per cent in 2010.

The Dubai emirate, which accounts for around 80 per cent of the UAE's non-oil trade, saw annual inflation of 0.5 per cent in November.

Abu Dhabi, which accounts for 10 per cent of the world's oil reserves and more than 60 per cent of the UAE economy, has yet to release detailed October data.