Abu Dhabi housing inflation slows to 1 percent

Abu Dhabi housing inflation slows to 1 percent

Abu Dhabi September CPI 1 percent year-on-year versus 1.6 percent year-on-year in August; Food prices edge up, housing and transport costs ease; Dubai inflation 0.6 percent year-on-year up to Q3 2011

October 15, 2011 4:16 by Reuters

Abu Dhabi’s annual inflation rate slowed to 1.0 percent in September as housing and transport prices in the Gulf emirate edged lower, data showed on Saturday.

Inflation had been edging higher over the past year in the emirate, which accounts for roughly 60 percent of the UAE economy and invests billions of dollars in industry, tourism and infrastructure to diversify away from oil.

Consumer prices eased on an annual basis in September after a 1.6 percent rise in the previous month, data from the Statistics Centre Abu Dhabi (SCAD) showed.

“The wave of inflationary pressures is ebbing and is now retreating,” said Fabio Scacciavillani, chief economist at Oman Investment Fund in Muscat. “International commodity prices are lower and probably will continue to decline over the next few months.”

Price growth was at 0.4 percent month-on-month in September, up from a 0.1 percent monthly gain in August.

Food prices, which account for more than 16 percent of the basket, rose 0.8 percent month-on-month in September.

“Domestic price pressures are on the wane due mostly to new housing units coming onto the market,” Scacciavillani said.

Housing and energy costs, which have a 38 percent weighting in the Abu Dhabi basket, dropped 0.7 percent, while transport costs fell by 0.1 percent.

On the month, the most significant price increase came from the alcoholic beverages and tobacco category, up by 7.4 percent, and the furnishings and household equipment group, up 5.9 percent.

Abu Dhabi, one of seven emirates that make up the UAE, only began reporting regular monthly inflation data last year.

Inflation in the UAE as a whole had eased to an 18-month low of 0.6 percent year-on-year in August, and prices edged down slightly from the previous month, helped by a fall in housing costs.

The UAE and Dubai, one of the seven emirates in the federation, have yet to release September consumer price data.

Analysts polled by Reuters in September expected an average inflation in the UAEfederation of 2.0 percent in 2011, up from 0.9 percent last year .

In a separate release, the Dubai Statistics Center said the inflation rate in the emirate rose 0.6 percent up to the third quarter, compared with the same period in 2010.

The increase was mainly due to a 6.6 percent rise in transport costs and to food prices accelerating by 5.3 percent, the data showed.

The UAE, which has escaped the public protests that have rocked nearby Bahrain, Omanand Yemen, said in May it would fix the cost of about 400 foodstuffs and household products until the end of the year.

Economy Minister Sultan bin Saeed al-Mansouri said in May he expected inflation between 1 and 1.5 percent this year. (Reporting by Martina Fuchs; editing by Sami Aboudi and Jane Baird)