UAE: Inflation rises further in May
Latest reading: Consumer prices in Dubai rose 5.5% on a year-on-year basis in May, following a 4.8% increase in the previous month. May’s reading was the strongest since August 2022.
Relative to the prior month’s figures, there were higher price pressures for transport (+16.1% in annual terms vs +11.1% in April). Meanwhile, inflation for housing and utilities eased slightly (+7.3% vs +7.4% in April), while food and beverages inflation also moderated (+6.7% vs +7.7% in April).
The jump in transport costs reflected higher fuel and freight costs as global energy prices surged in light of the closure of the Hormuz Strait.
Finally, consumer prices in Dubai increased 0.50% in May on a month-on-month basis, following a 1.29% rise in the prior month.
Outlook: Inflation should gradually cool over the coming quarters, returning to the tepid levels seen before the Iran war broke out as trade disruptions in the Hormuz Strait lessen.