Abu Dhabi's inflation rate accelerated to 3.59 per cent in the first eight months of this year compared with the same period last year, after food costs jumped during Ramadan, data show. The rise in food prices has occurred in previous years during Ramadan, when there are more family gatherings and catered events to celebrate the holy month. Inflation was 2.75 per cent in July. Statistics Centre Abu Dhabi (SCAD), which released the data, said food prices had the biggest increases, including a 35.4 per cent rise in "sugar, jam, honey, chocolate and confectionery".
Bahrain registered a 2.4 per cent rise in its inflation rate in the first eight months of the year compared with the same period last year because of food prices. The overall inflation rate for the Emirates is about 1 per cent, well below the double-digit rates seen in the economic boom of 2007 and 2008. Simon Williams, the chief economist at HSBC, said he did not expect inflation to become a concern this year.
"It's still pretty muted," Mr Williams said. "I don't think this is a start of sustained price growth in either of the emirates [Abu Dhabi and Dubai]. Demand is still too weak and there is still ample spare capacity." The largest increase was for the category of "housing, water, electricity, gas and other fuels", which increased by 4.9 per cent. Rents rose 5.5 per cent, the report from SCAD said. Education accounted for 21 per cent of the overall increase in the eight months, but that is expected to greatly change after this month's numbers come out.
SCAD updates education costs once a year, usually in September, and this year those fees appear to be less than 5 per cent of the total. SCAD said the rise in consumer prices last month affected the wealthiest 20 per cent of the population the most. They experienced an increase of 2.92 per cent in goods, while the least wealthy group had an increase of 2.02 per cent. Prices declined in several groups of consumer goods during the period. The cost of clothing dropped by 5.7 per cent and footwear by 22.7 per cent. Communication costs fell by 14.1 per cent.