UAE: Inflation in Dubai wanes to 20-month low in July

UAE Inflation July 2023

UAE: Inflation in Dubai wanes to 20-month low in July

Inflation in Dubai receded to 1.0% in July, down from June’s 2.1%. July’s result represented the lowest inflation rate since November 2021. Looking at the details of the release, the deceleration was chiefly due to softer price growth for food. Moreover, prices for transport declined nearly 20% year on year, a steeper fall than in June. These developments more than offset prices for housing and utilities increasing at a brisker rate.

Accordingly, the trend pointed down, with annual average inflation coming in at 4.1% in July (June: 4.6%).

Lastly, consumer prices in Dubai rose 0.44% in July over the prior month, accelerating from June’s 0.24% rise. July’s result was the strongest increase in prices since February.

Meanwhile, data for the UAE as a whole is not available past Q4 2022, when inflation softened to 4.6%, after it peaked—as expected—in Q3 2022 at 6.5%. Consequently, in 2022 inflation accelerated to a multi-year high of 4.8%, markedly above 2021’s 0.2% print. Meanwhile, in line with price developments in Dubai this year, price pressures in the UAE should have softened in Q1 2023 and further in Q2, bringing H1 2023’s average below that of the prior six months. Going forward, tighter monetary policy and a slowdown in economic activity suggest the downward trend should continue in coming quarters.

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