UAE inflation among GCC's lowest

A sharp slowdown in the UAE property sector has reversed several years of a rapid increase in inflation in the UAE, pushing the rate to a nine-year low of around 1.5 per cent in 2009, official data showed yesterday. At 12.3 per cent, the UAE had the second-highest inflation rate in the six-nation Gulf Co-operation Council (GCC) in 2008 after Qatar but now has one of the lowest rates in 2009, according to official figures.

Inflation in the UAE and other GCC members had soared to record high levels in the previous years because of a surge in global commodity prices, strong domestic demand due to the sharp rise in oil prices, and the weakening of the US dollar, to which most Gulf currencies are effectively pegged.

Housing services swelled by around 4.87 per cent in 2008 to push inflation to record high but growth plunged to only about 0.42 per cent in 2009 because of a large decline in rents and property prices in Dubai and other emirates.

The figures by the Ministry of Economy showed year-on-year inflation in the country stood at 1.56 per cent in 2009, its lowest level since 2000, when the consumer price index (CPI) was officially put at 1.4 per cent.

Dubai recorded the highest inflation rate in the UAE last year, standing at 4.06 per cent, while there was a deflation of 0.05 per cent in Umm Al Qaiwain.