UAE: Consumer prices record joint-smallest fall since March 2020 in January

UAE Inflation

UAE: Consumer prices record joint-smallest fall since March 2020 in January

Consumer prices increased 0.15% in January over the previous month, accelerating from the 0.09% rise seen in December. January’s result marked the sharpest increase in prices since June. The reading chiefly reflected higher prices for transportation. However, the overall increase was capped by lower prices for housing, water, electricity and gas, as well as for food and beverages.

Meanwhile, consumer prices declined 1.9% on an annual basis in January, a more moderate drop than December’s 2.1% fall. January’s reading marked the joint-smallest dip in consumer prices since March 2020. Meanwhile, the trend remained stable, with the annual average variation of consumer prices coming in at December’s 2.1% in January.

Consumer price pressures will likely have remained subdued in the first quarter of the year. Looking ahead, the drop in price pressures should further moderate in H1 as economic activity recovers as the Covid-19 vaccine is gradually rolled out. Later in the year, inflation should return on the economy strengthening and higher prices, on average, for oil.

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