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Abu Dhabi Nov inflation steady at 4.1 pct
Housing costs flat, food and transport costs edge higher.
December 22, 2010 4:18 by Reuters
Abu Dhabi’s annual inflation rate stayed at 4.1 percent for the second consecutive month in November, at least a two-year high, as housing and energy prices were stable, offsetting rising food and transport costs, data showed on Wednesday.
Inflation in the emirate, which accounts for 10 percent of the world’s oil reserves and more than 60 percent of the UAE economy, is still far below levels of around 15 percent reached at the height of an economic boom in 2008.
On a monthly basis, November consumer prices rose 0.2 percent, decelerating from a 0.4 percent rise in the previous month, data from the UAE National Bureau of Statistics showed.
Abu Dhabi only began reporting monthly inflation data at the start of 2009.
“The rise in gasoline prices had an impact and there appears to be the possibility of further increases, and we are pencilling in higher inflation rates in the UAE for 2011 in light of other recent price increase announcements, for example in the utility sector,” said Giyas Gokkent, group chief economist at National Bank of Abu Dhabi.
A Reuters poll forecasts oil prices will average over $86 a barrel in 2011 on declining inventories and growth in demand from Asia. Crude oil was priced at $90.31 a barrel at 1130 GMT on Wednesday.
Prices of housing and energy, which have a 38 percent weighting in the Abu Dhabi inflation basket, were stable in November.
“Some supply of property has yet to come to the market,” Gokkent said.
“Afterwards there should be downward pressure on rents, particularly in Abu Dhabi. At that time, you may have inflation weighed down somewhat by the decline in rents. But until then, food and transportation will have an impact and pressure the average price level.”
Transport costs, which account for nearly 10 percent of the basket, rose 0.1 percent from the previous month.
The data for the UAE, the world’s third-largest oil exporter, and the individual emirates are not directly comparable as basket weights differ.
Overall UAE inflation was largely flat month-on-month in November, as the cost of housing and transport fell, while food and goods and services prices rose. Analysts said rising fuel prices and food costs may push inflation higher.
Consumer prices in the UAE, had hit an 18-month high of 1.9 percent in October.
Inflation in the emirate of Dubai, which was hit by both the global downturn and its own debt crisis, increased slightly in November to reach 0.5 percent year-on-year.
In a Reuters poll released on Tuesday, analysts forecast UAE inflation of 1.2 percent this year and 2.8 percent in 2011, while economic growth is forecast to reach 2.3 percent this year and 3.6 percent in 2011, the slowest pace in the Gulf.
(Reporting by Martina Fuchs; Editing by Susan Fenton)