x Abu Dhabi, UAEThursday 20 July 2017

Cheaper phones and clothes slow inflation in Abu Dhabi

But continuing rises in the cost of housing, utilities and education offset slight slowdown in inflation in the emirate last month.

Cheaper clothes, shoes and mobile phones led to a slight slowdown in inflation in Abu Dhabi last month, figures released by the emirate's Statistics Centre show. But continuing increases in the cost of housing, utilities and education led to an overall rise in inflation for the first four months of the year. The consumer price index rose 2.16 per cent in the four months to the end of April, compared with the same period last year.

Average prices actually fell by 0.4 per cent last month from March, with the biggest fall - nearly 20 per cent - coming in the price of footwear. "Telephone and telefax equipment" also showed a significant fall, of 12 per cent. These were outweighed, however, by big rises in the cost of education in the emirate, which jumped 20 per cent in the first four months, and by a 5 per cent increase in the price of housing and utilities, the highest weighted grouping on the centre's "basket" of good and services.

"The main factor underlying the increase in the average prices of this group was the rise by 5.8 per cent in house rents," said the centre. Housing and utilities accounted for nearly 90 per cent of the overall increase, the statistics show. Inflation of 2.16 per cent for Abu Dhabi means the UAE is keeping within international forecasts for overall consumer price rises. In February, the IMF forecast UAE inflation of about 1.5 per cent, with increases in Abu Dhabi partially outweighed by price falls in other emirates, notably Dubai.

Economists were reassured that the overall inflation rate was in line with expectations. "These figures show we're not seeing a build-up year on year," said John Sfakianakis, the chief economist at Banque Saudi Fransi. "These are very manageable numbers. "The recovery is not causing the economy to overheat, that's for sure. If you compare it to the latest figures in Saudi Arabia, showing a 4.9 per cent rise year on year, it is very manageable."

Saudi inflation has been stoked by high rental costs and increases in the price of food. The latest figures for Abu Dhabi show a 3.1 per cent rise in the cost of food and non-alcoholic beverages, and a 9.4 per cent rise in the lower-weighted alcoholic beverages and tobacco basket. The rise in basic food prices accounted for nearly a quarter of the overall rise in prices in the four months. fkane@thenational.ae