x Abu Dhabi, UAEFriday 21 July 2017

Consumer prices fall 2.7% in four months

Consumer prices fell 2.7 per cent between January and April, reflecting a drop in housing costs, the first-ever monthly inflation data has revealed.

Annual inflation slowed dramatically during the first four months of this year, from 7.2 per cent in January to 1.9 per cent in April, the lowest rate in more than a decade, according to information released by the Ministry of Economy today. The data marked an important milestone for the Government, which has long been criticised by bankers and economists for not releasing price information frequently enough. The new inflation figures are broken down by month - a first for UAE inflation data - and are calculated using an updated basket of goods used to represent the average expenditures of UAE residents. Annual inflation in January stood at 7.2 per cent, slowing to 6.2 per cent in February, 4.5 per cent in March, and 1.9 per cent in April, according to the Ministry of Economy data. The average rate of inflation for 2008 was 12.3 per cent. Until the financial crisis hit late last summer, soaring inflation rates were the main economic bugbear in the Gulf, as prices spiralled upwards on the back of high oil prices and rapid economic growth, threatening to destabilise Gulf economies. However, since the onset of the crisis, oil and commodity prices have fallen and growth rates have slowed, easing the rate of price increases dramatically. Among the main causes of the recent decrease in prices was a drop in the cost of housing and utilities, which make up nearly 40 per cent of the basket. The category's price index fell by nearly 5 per cent during the first four months of the year. The most recent data preceding today's release showed inflation at 11.1 per cent for the year in 2007. However, that data was based on a basket of goods calculated in 2000, which did not accurately represent the spending patterns of today's consumer, economists say. tpantin@thenational.ae