Consumer price growth in Dubai, which accounts for 28 percent of the UAE economy, has held below 1 percent for most of the year as bank lending remains slow and the property sector weak in the wake of the emirate’s 2009 debt crisis. Inflation was zero in September.
On a month-on-month basis, price growth eased to 0.3 percent in October after a 0.4 percent increase in September, the data from the Dubai Statistics Center showed.
“It’s another very weak print. Growth may have picked up a little this year, but domestic demand is still pretty subdued and there is still a lot of spare capacity in the economy, particularly in the real estate sector,” said Simon Williams, chief economist for the Middle East and North Africa at HSBC.
On Saturday, Abu Dhabi reported that its annual inflation rate slowed to a 22-month low of 0.9 percent in October after 1.0 percent in September.
The UAE has yet to release October consumer price data for the whole seven-member federation.
In Dubai, food costs, the second largest consumer expense with an 11 percent weighting in the index, increased 0.5 percent month-on-month in October after a 1.1 percent jump in the previous month.
Housing prices, the biggest component in the Dubai basket, were unchanged month-on-month after a slight increase of 0.1 percent in September. Transport costs dipped 0.1 percent in October, the data showed.
Analysts polled by Reuters in September predicted average inflation in the UAE of 2.0 percent in 2011 and 3.0 percent in 2012, up from 0.9 percent last year.
UAE central bank governor Sultan Nasser Al-Suweidi said in June that inflation this year was likely to be lower than 3 percent as the real estate sector remained under pressure.
The UAE escaped public protests related to demands for democracy and better living conditions that rocked nearby Bahrain, Oman and Yemen this year, but said in May it would fix the cost of about 400 foodstuffs and household products until the end of the year, among other measures to control inflation.
