UAE Central Bank Sees Inflation Picking Up in Second Half

The United Arab Emirates central bank expects consumer prices to start rising again in the second half of 2021.

Prices dropped an average -0.3% in the first six months of 2021, the Gulf country’s central bank said in its economic quarterly review. This is because real estate prices and private consumption are still recovering from the coronavirus pandemic and the rout in oil prices, but “a move into positive territory is expected to start in the second half of 2021,” the regulator said.

The Gulf nation’s Consumer Price Index has been deflationary since 2019, weighed down mainly by its real estate basket, which accounts for more than a third of the gauge.

Property prices in Dubai, one of the UAE’s seven emirates and its main travel destination, declined an average 5.5% on an annual basis during the first quarter of the year, while rents fell about 4.3%. In the capital, Abu Dhabi, residential property prices marked their first year-on-year gain in more than five years, according to the review.

The UAE central bank pegs its currency to the dollar and monetary policy tends to move in lockstep with the U.S. Federal Reserve.

More from the report:

  • Gross domestic product is seen rising 2.4% this year and 3.8% in 2022, while oil growth is expected to contract 1% in 2021.
  • The UAE’s economy is set to benefit next year from neighbor Qatar hosting the World Cup, and from the World Expo in Dubai
  • Dubai’s hotel occupancy rate during the first quarter was at 64% compared with 69% a year earlier

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.