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.
Author: Joffrey Simonet, Economist