Abu Dhabi's inflation rate rose to a three-year high last month fuelled by a rise in food prices and housing.
The emirate’s consumer price index rose 2.6 per cent in February, when compared with the same period a year earlier. A basket of goods is used to calculate the index.
Fish and seafood, along with vegetables and coffee, tea and cocoa were the main contributors to higher inflation in the food and non-alcoholic beverages category, according to data released by Statistics Centre-Abu Dhabi (Scad) yesterday.
The housing, water, electricity gas and other fuels category, which carries the highest weighting, was the second highest contributor to inflation in February, Scad said.
A 5 per cent cap on rents in the city was removed in November.
Jones Lang LaSalle reported in January that the average annual rent for a selection of two-bedroom apartments it monitors in the capital increased to Dh140,000 in the final three months of 2013 from Dh130,000 in the second quarter and Dh120,000 at the start of the year.
Inflation will rise this year as the housing market picks up amid a surge of new projects in Abu Dhabi, said Shady Shaher, senior economist for the Middle East and North Africa at Standard Chartered.
“The housing component is the largest of the inflation basket and I expect housing to accelerate,” he said. “But the overall outlook for the economy is very strong for Abu Dhabi, which is largely driven by government spending and should underpin the economy.”
But the rise is not expected to significantly squeeze households, he said.
“It isn’t likely to be as elevated as 2008 when inflation reached 12 per cent. The housing is rising from a very low base,” Mr Shaher said.
halsayegh@thenational.ae
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