UAE annual inflation drops to 0.43% in Jan on lower housing prices

Sunday, Mar 03, 2013

DUBAI (Zawya Dow Jones)--Annual inflation in the United Arab Emirates fell slightly to 0.43% in January, from 0.66% in December, driven by mainly by a decrease in the housing component, the country's national bureau of statistics said in an emailed statement on Sunday.

A rise in the food, beverages and tobacco, and transportation prices were mitigated by housing prices, which dropped a 1.64% on year. The housing category makes up nearly 40% of the U.A.E.'s overall Consumer Price Index.

The food & soft drinks category of the CPI, was up an annual 2.93% in January, while beverages and tobacco showed an increase of 17.24%.

"Inflation has been subdued for a considerable period of time, but with stronger demand and growth conditions in 2013, and some evidence of a pick-up in house prices in Dubai at least, we expect inflation to be higher in 2013. We are forecasting 1.6% year on year, rising to 3.5% in 2014," Liz Martins, a senior economist at HSBC Bank told Dow Jones on Sunday.

U.A.E.'s economy minister said in January he expects inflation to range between 1% and 1.5% this year.

Write to Leila Hatoum at leila.hatoum@dowjones.com

(END) Dow Jones Newswires

03-03-13 0833GMT