Inflation in the UAE recorded the smallest growth 17 consecutive months in July in line with the trend in the rest of the GCC where price increases remained significantly lower than counterparts in the Middle East and around the globe.
The Dubai Consumer Price index grew by 1.0 per cent during July-2023 as compared to the 5.2 per cent increase it witnessed during July 2022. This was the smallest growth witnessed by the Dubai CPI in the last 17 consecutive months, Kamco Invest said in its report.
“The drastic decline of Dubai’s CPI was mainly due to the drop in Transportation Group costs which witnessed 19.7 per cent fall during July-2023. The fall in transport costs more than compensated for the 6.1 per cent year on year growth of the housing, water, electricity and gas group during the month. Overall, only three out of Dubai’s 13 CPI subgroups recorded Y-o-Y decreases during the month,” said the report.
On the other hand, certain key subgroups saw year-on-year growth during July-2023; namely food and beverage group (3.2 per cent), hotels and restaurants group (3.5 per cent) and education group (1.6 per cent). In terms of month-on-month inflation growth, Dubai’s CPI index remained stable during July-2023 only registering 0.4 per cent. Dubai’s housing, water, electricity, gas and other fuels subgroup, the largest weighted group in Dubai’s CPI, recorded 0.49 per cent month-on-month in July, while the sport, culture and recreation subgroup witnessed 4.55 per cent, the largest M-o-M gain among the groups in Dubai’s CPI, said the report.
Overall, global inflation has been gradually slowing down in 2023 as compared to 2022 mainly due to lower food prices, falling energy prices and softening global demand due to monetary tightening policies. Key geopolitical factors such as the recommencement of grain exports from Ukrainian ports under the recently collapsed Black Sea Grain Initiative contributed to the decline in global food prices, Kamco analysts said.
“However, despite the falling trend of inflation during the first seven months of the year, global headline inflation appears to have peaked while global core inflation remains well above the central bank target,” it said.
According to the IMF’s World Economic Outlook Update, global headline inflation is forecasted to decline from 8.7 per cent in 2022 to 6.8 per cent in 2023 and 5.2 per cent in 2024. On the other hand, global core inflation is expected to decline from an annual average of 6.5 per cent in 2022 to 6.0 per cent in 2023 and 4.7 per cent in 2024 underlying a slower pace of decrease than headline inflation.
Among the GCC countries, inflation growth in the housing subcategory was on an upward trend led by 9.1 per cent Y-o-Y growth in Saudi Arabia followed by 3.2 per cent Y-o-Y uptick in Kuwait during June 2023. Similarly, Dubai’s housing prices rate expanded 6.1 per cent during the similar period.