The latest rate hikes have also further reduced inflation that soared earlier this year
The United Arab Emirates on Friday slashed retail fuel prices for January 2023, which will increase residents’ disposable income, boost residents’ purchasing power and reduce costs for logistics and transport companies.
From January 1, the price of Super 98 will be AED 2.78 per liter, which is AED 0.52 or 15.7% lower than the price in December. Similarly, Super 95 was priced at AED 2.67 per liter in the first month of the new year, a drop of 16% or AED 0.51. The E-Plus is priced at AED 2.59 per liter, which is 16.7% less expensive.
The rate cut brought gasoline prices to their lowest level in 11 months. UAE January 2023 95-octane prices are more than 43% below the global average.
Lower fuel prices lower transportation costs, which in turn lowers prices for consumer goods. In addition, the recent rate hikes have further reduced inflation, which had soared earlier this year due to the Russia-Ukraine crisis and a spike in crude prices.
Inflation in the UAE is already the lowest in the world and could fall further in 2023, Economy Ministry Abdulla bin Touq Al Marri said in early December.
“We’ve been through global turmoil over the past six months. But it’s the UAE’s agility that has put it on the global map. Inflation in the first nine months was 5.5%, one of the lowest in the world. We expect inflation to fall further next year,” the minister said.
Issam Kassabieh, an independent consultant in Dubai, said the drop in fuel prices would support an increase in the disposable income of citizens and residents, which could be reinvested in other purchases.
“Commercially, this will support businesses that rely heavily on transportation and logistics. Overall, lower fuel prices will support mitigating the effects of inflation observed. In general, the prices of energy products such as fuel will The overall level of prices has a significant impact because they are the main inputs in the production of many goods and services,” Kassabieh said.
Atik Munshi, Managing Partner of FinExpertiza UAE, said energy prices affect all sectors of the economy in one way or another.
“Reduced fuel prices will help contain costs for residents and companies. It is also a ‘feel-good factor’ for individuals as savings can be immediate [cause a] Chung [of] Dopamine in many people. Reducing fuel will lower overall costs, so at least somewhat lessen the inflationary impact,” Munshi said.
For an industry like logistics or aviation, where fuel is a major operating cost, any drop in petrol prices would lower operating costs, he added.
“Super fuel savings of more than 15% are significant. Many economies around the world subsidize fuel and energy prices to boost local industry and thus help these companies become more competitive. With the introduction of the UAE corporate tax, we hope Seeing such measures is more enthusiastic,” Munshi added.