The rising cost of food drove inflation in Dubai higher last month as consumer price forecasts point to further increases next year across the Gulf.
Inflation in Abu Dhabi also edged slightly upwards last month, although the country's overall rate of inflation advanced at a slower rate. Inflation is expected to rise only moderately next year.
"An improvement in private-sector growth, aggregate demand and the base effect of food prices will mean inflation picks up slowly," said John Sfakianakis, the chief economist of Banque Saudi Fransi.
His bank forecasts inflation to edge higher in five of the six GCC states next year, with consumer prices in the UAE growing by 3.1 per cent. Prices this year would average 1 per cent, it said.
Dubai's overall rise in consumer prices of 0.5 per cent on an annual basis during last month masked bigger jumps in the cost of fruit, vegetables, meat and other foods, data released by the Dubai Statistics Centre (DSC) yesterday showed. Food prices increased by 4.2 per cent.
Nonetheless, persisting weakness within the emirate's housing market helped to keep a lid on inflation advancing further.
Housing costs, which include rent and utility bills, dropped 1.9 per cent, the eighth consecutive monthly decline.
In Abu Dhabi, consumer prices rose 0.17 per cent last month from the previous month, the official WAM news agency reported yesterday, citing data from Statistics Centre Abu Dhabi. Countrywide, the consumer price index rose 0.02 per cent last month from the previous month, the news agency reported, attributing the figures to the National Bureau of Statistics.