DUBAI: Abu Dhabi's annual inflation rate slowed to a 22-month low of 0.9 percent in October as transport prices in the Gulf emirate eased and housing costs were unchanged, data showed on Saturday.
Inflation in the emirate, which accounts for roughly 60 percent of the United Arab Emirates economy, had been edging higher over the past year, peaking at 4.1 percent in November and December.
Last month, consumer prices eased to the lowest level on an annual basis since December 2009, data from the Statistics Centre Abu Dhabi (SCAD) emailed to Reuters showed, after a 1.0 percent year-on-year rise in September.
The UAE and Dubai, one of the seven emirates in the federation, have yet to release October consumer price data.
Month-on-month, price growth was at 0.3 percent in October, down from 0.4 percent in September, the data also showed.
"Oversupply in the real estate sector in the UAE overall is a key factor. Although housing prices did not move in October, it has been the main drag on the inflation picture over the year," said Shady Shaher, senior economist at Standard Chartered in Dubai. "Imported food price inflation has been moderate relative to last year."
Transport costs, which account for almost 10 percent of the consumer basket, fell 0.2 percent on a monthly basis in October, after a 0.1 percent decrease in September.
Food prices however, which account for more than 16 percent of the basket, rose 1.3 percent month-on-month in October after a 0.8 percent increase in the previous month. Housing costs were unchanged.
On the month, the vegetables category saw the most significant price drop of 0.9 percent, the data also showed.
Analysts polled by Reuters in September expected an average inflation in the UAE federation of 2.0 percent in 2011 and 3.0 percent in 2012, up from 0.9 percent last year.
In comparison, Kuwait and the world's top oil exporter Saudi Arabia, have the highest annual inflation rates in the Gulf, of 4.5 percent and 5.3 percent year-on-year respectively in September, although price growth remains well below record highs seen during an oil-fuelled boom in 2008.
UAE central bank governor Sultan Nasser al-Suweidi said in June that inflation was likely to be lower than 3 percent as the real estate sector remained under pressure.
The UAE, which has escaped the public protests that have rocked nearby Bahrain, Oman and Yemen, said in May it would fix the cost of about 400 foodstuffs and household products until the end of the year.
Copyright Reuters, 2011
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