ABU DHABI // Consumers have expressed relief that the UAE's once surging inflation rate seems to be on the way down, bringing the cost of living to more manageable levels. "I've noticed housing prices falling and also a lot of stores and supermarkets providing discounts and special offers," said Ahmad al Suweie, a 27-year-old Emirati businessman who has three children. "This could be the start of a trend of falling prices. I hope so."
Sultan bin Saeed al Mansouri, the Minister of the Economy, told reporters on the sidelines of the Abu Dhabi Economic Forum yesterday that the Government was hoping that inflation would drop to five per cent this year. The true rate of inflation is difficult to ascertain. The ministry reported a 12.2 per cent rate in March last year, excluding Abu Dhabi, but there have been no official figures since then. In October, the IMF predicted in its regional economic outlook that UAE inflation would probably be 12.9 per cent for 2008, then ease to 10.8 per cent in 2009.
The Government, marking Gulf Consumer Protection Day on Sunday, announced a programme to provide discounts on about 1,000 items, including chicken and rice. Prices of other goods have started to fall naturally. "In the past few months, the price of a lot of products has come down," said V Nandakumar, the corporate communications manager at Emke Group, which runs LuLu Hypermarkets. He said a reduction in the price of items such as powdered milk was due to the strengthening value of the dirham, a decline in raw material costs and a reduction in the cost of importing goods.
Shoppers at Marina Mall yesterday welcomed the lower prices, which they regard as one of the few positive trends to emerge from the economic slowdown. Mohammed Abdullah, an Indian engineer who has lived in the UAE for three years and shares a home with two friends, said: "In the past two years all I see is prices going up and up - especially housing. How can we afford to live and buy our necessities when most of our salary is going on making sure we have somewhere to sleep? Once the price of rent falls, I will be able to save as much as I had hoped to so I can send more money to my family."
Mr Abdullah said he had not noticed any decrease in prices but that he would be "thankful when it happens". Monica Kujawski, a South African mother of two, said she and her husband had struggled to save money since they arrived in the UAE two years ago. "I'm really relieved now that the market has calmed down, and prices are starting to settle," she said. "I hope what they say about the prices falling even more will happen soon. That would make life so much easier, and would make our move here worth it."
Julie Crosby, a consultant at the Abu Dhabi-based brokerage LLJ Properties, said rental inflation in the capital had been negligible so far this year. "Prices have been static since before Christmas," she said. Residents can also look forward to less dramatic increases in their grocery bills. Commodities on world markets have fallen by 25 per cent per cent over the past 12 months and more than 30 per cent since June, according to the Food and Agriculture Organisation's food price index. The UAE imports about 80 per cent of its food.