UAE: Inflation to fall this year as price rises slow – News

Echoing central bank forecasts, economists say cost of living will be lowest in region

The cost of living in the UAE will decline in 2023 and 2024 due to slower growth in different economic sectors and deflationary trends in other countries.

The UAE Central Bank expects the country’s inflation rate to fall to 3.2% as price increases slow across all categories, especially transport and food and beverages.

“Imported inflation is expected to be moderate due to the global deflationary trend, while rents and wages are also expected to contribute moderately. Inflation is expected to moderate further to 2.8% by 2024, in line with the global trend,” the central bank said.

As the country began to recover from the pandemic, the cost of living began to rise as the population began to increase and demand for products increased as companies began hiring again to meet demand and foreign workers flooded in.

Similarly, rental growth has slowed in most parts of the UAE and has stabilized in some areas following the continued post-pandemic rise.

In addition, the UAE’s rate hikes in tandem with the Federal Reserve have also helped curb inflation in the country.

Inflation is one of the lowest in the world and is expected to fall further in 2023, UAE Economy Minister Abdulla bin Touq Al Marri told a news conference in December.

“Inflation in the first nine months was 5.5 percent, one of the lowest in the world. We expect inflation to fall further next year,” Al Marri told a news conference.

According to the central bank’s CPI inflation data, the cost of transportation, catering, and entertainment decreased in the fourth quarter from the previous quarter.

Echoing the central bank’s forecast, economists said inflation in the UAE and the Gulf would ease this year and be among the lowest in the region.

“Dubai’s inflation rate edged up to 4.9% year-on-year in February 2023 on the back of stronger food inflation. But this is well below last year’s peak and we think headline rates will come down this year,” said Capital Economics chief emerging market economist Says William Jackson.

Inflation has slowed across the Bay Area at the start of the year, Jackson said. “We think it will continue to do so for the rest of the year.”

Inflation in the UAE will more than halve this year and be among the lowest in the region by 2023, according to Oxford Economics. The average was 2.1 percent, compared with 5.6 percent last year.