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The UAE’s’ consumer price index (CPI) is falling at a slower pace due to an uptick in the non-oil sector and employment, according to new data published by the central bank.
The CPI declined by 1.6 percent year-on-year during the fourth quarter of 2019 compared to a drop of 2.1 percent in the previous quarter, the report said.
“The pickup in non-energy growth and employment have moderated the pace of deflation,” the regulator said. However, it added that the decline in oil prices, pegged at 6.5 percent, and the continued fall in rent prices have continued to weigh negatively on inflation in the UAE.
The central bank report noted that employment in the private sector increased by 2 percent year-on-year during the fourth quarter, the highest growth in the last seven quarters and higher than the 1.1 percent increase recorded in the previous quarter. The non-hydrocarbon gross domestic product (GDP) growth also accelerated during the same period.
“The pickup in non-oil activities is also reflected in improved labour market indicators. Employment in the private sector picked up further momentum,” the central bank said.
Contributors to CPI decline
Among the goods tracked by the index, the textiles, clothing and footwear group registered the biggest year-on-year decline in prices during the fourth quarter, at 6.8 percent, followed by housing (4.4 percent), transportation (3.4 percent), and tobacco and beverages (2.5 percent).
At the emirate level, Dubai registered a bigger decline in CPI, at 2.5 percent, compared to Abu Dhabi, at 1.2 percent. Inflation rates differ across the two emirates because the weights assigned to the different components in the consumption basket vary. In Dubai, for instance, the transportation costs have a lower weight than in Abu Dhabi.
The Statistics Centre, Abu Dhabi (SCAD) had earlier reported that the country’s overall CPI for 2019 dropped 0.8 percent compared to the previous year.
The International Monetary Fund (IMF) had revised the UAE’s 2019 growth outlook from 2.8 percent in April 2019 to 1.6 percent. Real growth in the UAE exhibited a year-on-year increase of 1.3 percent during the fourth quarter, also moderating from the previous quarter.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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