United Arab Emirates Inflation March 2018

United Arab Emirates

United Arab Emirates: Inflation falls in March as VAT effects start to subside

April 23, 2018

Consumer prices fell 0.65% in March from the prior month, a sharper decline from February’s 0.15% month-on-month fall. The decline observed in the month signals a further adjustment of price levels to the introduction of a 5% VAT in early January, as a large number of companies keep compressing their margins in a bid to support demand. According to the Federal Competitiveness and Statistics Authority, the biggest negative contribution to the overall reading in March came from decreases in the prices of food and beverages; housing, water, gas and electricity—which carries a weight of over a third of the index; and transportation, in that order.

Meanwhile, inflation eased from 4.5% in February to 3.4% in March. Annual average inflation inched up from 2.3% in February to 2.4% in March.

FocusEconomics Consensus Forecast participants expect inflation to average 3.6% in 2018, unchanged from last month’s forecast, and 3.0% in 2019.

Author:, Economist

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