x Abu Dhabi, UAEThursday 27 July 2017

Cost of property down again in UAE but food rises

Weakness within the property sector help the rate of inflation ease for a fourth month in a row last month.

Property prices continue to drop according to the latest inflation UAE inflation figures. Pawan Singh / The National
Property prices continue to drop according to the latest inflation UAE inflation figures. Pawan Singh / The National

Further deflation within the country's housing market pulled down the rate of inflation for the fourth consecutive month last month.

The inflation rate rose 1.1 per cent compared to the same month last year, data from the National Bureau of Statistics showed today. The rate of increase slowed from a 1.2 per cent rise in March.

Heaping downward pressure on the index was the housing and utility component, which dropped 1.4 per cent on an annual basis. Housing and utility costs are the biggest contributors to the index.

An oversupply of property capacity and low demand for new units is continuing to drag on the property market. Prices are already estimated to have fallen by around half from their peaks before the global financial crisis.

The property slump contributed to a brief period of deflation in the economy between July 2009 and last year as prices eased.

Food and beverage costs, which have the second largest weighting in the index, increased by 5 per cent last month from the same period last year.

Minister of Economy Sultan al Mansouri said last week he forecast inflation to rise from 1 to 1.5 per cent this year.

 

tarnold@thenational.ae