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| 23 April, 2018

UAE inflation continues easing in March after tax boost

Annual inflation dropped to 3.4% last month from 4.5% in February and 4.8% in January, which was the highest since 2015

VAT is changing the way businesses collect, format and report tax information. Image used for illustrative purpose.

VAT is changing the way businesses collect, format and report tax information. Image used for illustrative purpose.

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DUBAI  - Consumer price inflation in the United Arab Emirates continued to ease in March after hitting a multi-year high in January when the government imposed a 5 percent value-added tax, official data showed on Monday.

Annual inflation dropped to 3.4 percent last month from 4.5 percent in February and 4.8 percent in January, which was the highest since 2015. Month-on-month, consumer prices fell 0.7 percent in March.

Some companies have been discounting to maintain market share after initially hiking prices more sharply in response to the tax.

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For example, food and soft drink prices rose 4.9 percent year-on-year in March, slowing from a jump of 6.5 percent in February, and fell 1.7 percent from the previous month. Several other categories, including furniture and household goods, also dropped month-on-month.

In addition, housing and utility prices, which account for more than a third of the entire consumer basket, sank 1.2 percent year-on-year in March because of a weak real estate market in the UAE, which is pushing down residential rents in Abu Dhabi and Dubai.

(Reporting by Andrew Torchia; Editing by Gopakumar Warrier) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))