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UAE Sept CPI at 16-mth high on food, transport costs
Consumer prices +0.9 pct m/m in Sept, +0.5 pct in Aug.
November 1, 2010 9:43 by Reuters
United Arab Emirates inflation edged up to a 16-month high of 1.2 percent on an annual basis in September, after staying at 0.9 percent for four consecutive months, data showed on Sunday.
Consumer prices in the world’s third-largest oil exporter jumped 0.9 percent on the month in September, the fastest growth rate since July 2008, mainly on swelling food and transport costs, data from the National Bureau of Statistics showed.
“Headline inflation will begin to rise everywhere and see additional inflationary pressures, but will remain extremely benign on an annual basis,” said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi.
UAE inflation hit a nine-year low of 1.6 percent last year, plunging from a record high of 12.3 percent in 2008, and price growth remains weak due to the impact of Dubai debt woes that squeezed the OPEC member’s banking sector.
Food costs, which account for 14 percent of the UAE basket, soared 2.7 percent month-on-month in September after a 2.0 percent rise in August, the data showed.
Food inflation traditionally climbs during the holy month of Ramadan, which ended in mid-September, when families enjoy larger and more elaborate meals after daylight fasting.
Transport cost growth accelerated to 1.6 percent, while the housing component — the largest item in the basket — rose by modest 0.2 percent. Education prices jumped 3.65 percent in September.
“The rise in inflation was expected, given the rise in global food prices,” said Monica Malik, chief economist at EFG Hermes in Dubai.
“We expect UAE inflation to continue to be one of the lowest in the region, with the ample housing supply and the continued fall in rental prices. Inflationary pressure is not a concern,” she said.
Inflation in the emirate of Abu Dhabi, which accounts for 10 percent of the world’s oil reserves and more than 60 percent of the UAE economy, shot up to 3.6 percent in September, its highest since at least the beginning of 2010.
Dubai, which lacks the oil wealth of Abu Dhabi and took a big hit from the 2008 global financial crisis and its debt crisis late in 2009, saw inflation subsiding to 0.5 percent year-on-year in September, separate data showed on Sunday.
In September, analysts polled by Reuters expected average UAE inflation of 1.5 percent in 2010 .
(Additional reporting by Martin Dokoupil; Editing by Michael Shields)