UAE: Inflation shoots up to nearly three-year high in January following the introduction of VAT
Consumer prices rose 2.67% in January from the prior month, a large increase from December’s 0.68% month-on-month upswing. This significant acceleration was largely due to the introduction of a 5% VAT rate and higher taxes for energy and carbonated drinks and tobacco implemented at the beginning of January, which pushed prices higher nearly across-the-board. According to the Federal Competitiveness and Statistics Authority, price increases for food and beverages, transportation and tobacco were the largest contributors to the overall reading.
Meanwhile, inflation shot up from December’s 2.7% to 4.8% in January, the highest level since August 2015. Annual average inflation also rose, from 2.0% in December to 2.2% in January.