x Abu Dhabi, UAEMonday 24 July 2017

Surge in education costs signals inflationary trend in Abu Dhabi, economist says

A surge in education costs nudged up an index measuring the cost of living in Abu Dhabi last month. An economist says the figures could signal the start of a trend.

A surge in education costs nudged up an index measuring the cost of living in Abu Dhabi last month.

An economist says the figures could signal the start of a trend.

Average consumer prices in the emirate rose 0.8 per cent last month from August; education costs increased the most by 3.9 per cent.

Clothing and footwear prices followed with rises of 2 per cent, while the costs of food and non-alcoholic beverages increased 1.1 per cent.

“In September it is a new school year, so it is a time where [schools] might reassess their pricing,” said Liz Martins,a senior economist with HSBC Bank Middle East.

“But the UAE has just seen a big macro[economic] rebound, and with that rebound I think you are going to get some population growth and a stronger demand climate in general.

“So I think inflationary pressures are going to be a theme that we see across sectors in the coming months.”

In the first nine months of the year, consumer prices edged up 1.1 per cent. They rose 1.4 per cent in the third quarter.

“We have had basically no inflation at all over the last four or five years in the UAE,” said Ms Martins. “There has been very, very little and partly that is because the economic climate has been so fragile that firms haven’t felt able to pass on higher costs to consumers.

“I think that is something we are going to see changing over the coming months and years.

“There is also higher rental price inflation which can feed through and that has not necessarily shown up in the CPI [consumer price index] yet, but it is clearly evident from other indicators.”

gduncan@thenational.ae