Inflation in the UAE climbed to a three-month high of 1.4 per cent on an annual basis in May and edged up from the previous month as food prices continued to soar, Reuters reported yesterday.
Inflation has remained low this year, at 1.1 per cent in April, as banks remain hesitant to lend despite inflows of deposits to the Opec member, seen as a relatively safe haven after unrest rocked nearby Bahrain, Oman and Yemen.
On the month, living costs rose 0.2 per cent in May after five monthly declines in a row, data from the National Bureau of Statistics showed.
Food costs, which account for 14 per cent of consumer expenses in the $298 billion UAE economy, jumped 1.3 per cent month-on-month in May, the same pace as in the previous month, the data showed. Analysts polled by Reuters in March expected average inflation in the second largest Arab economy to quicken to 2.5 per cent in 2011 from 0.9 per cent last year, which was the lowest annual level since 1990.
The UAE called on retailers to offer discounts of up to 50 per cent during Ramadan, which begins in Aug-ust, when food prices usually surge as families enjoy more elaborate evening meals after fasting.
Housing prices, the largest basket item with a 39 per cent share, fell 0.1 per cent on a monthly basis in May in a sixth consecutive decline as the property sector remains weak. Transport costs rose 0.1 per cent, slightly slower than in April.
"It seems that in May, the prices rose as a result of an increase in consumer demand. This is normal as during this time of the year, people prepare to go for their summer vacation and do most of their shopping. This puts pressure on the prices of consumer goods," Dr Mohammad Amerah, an Abu Dhabi-based economist told Gulf News.
"The consumer prices may continue to rise in June as well as in July and August with Ramadan approaching," Amerah added.
Minister of Economy Sultan Bin Saeed Al Mansouri recently said in Abu Dhabi inflation is likely to be near 1.5 per cent and 2 per cent this year.
In May, Mohammad Ahmad Bin Abdul Aziz Al Shehi, Undersecretary in the Ministry of Economy, announced the launch of a nationwide campaign to stabilise the prices of 400 major commodities at 70 outlets in the UAE.
"Retail outlets have responded to the Ministry's request and agreed to fix the prices of 400 major commodities at 70 outlets in various emirates until the end of 2011.
These outlets include Carrefour, cooperative societies, LuLu Hypermarket and Spinneys which form 75 per cent of the market share of retail outlets in the UAE," Al Shehi said at the time.
From / Gulf News