Prices of the three petrol products have been reduced by 8-9 per cent on average while the diesel price has been increased by 1.6 per cent to Dh1.89.

The UAE Fuel Price Committee met in Abu Dhabi at the Ministry of Energy on Monday fixed the new price of petrol 98-Octane at Dh1.90 per litre slashing 8.21 per cent. Petrol 95-Octane would be 8.6 per cent lower at Dh1.79 a litre and the price of 91-Octane would be even cheaper by 8.99 per cent at Dh1.72 per litre.

It all started on July 28 when the diesel price was reduced 23 per cent from Dh2.35 litre to Dh1.83 with effect from August 1. On August 28 the UAE Fuel Price Committee which comprises oil marketing companies and the UAE Ministry of Energy. further cut the prices by 8.5 per cent.

The Committee meets every 28th of the month to review the oil prices in light of the average international prices and fixes new prices applicable from the 1st of the next month.

Opec's monthly basket price fell to $45.03 a barrel on September 15 from $45.46 on August 15. On September 25 it further slipped to $43.76 a barrel according to Opec's website.

Consumers have welcomed the substantial cuts in the petrol prices.

Atif Butt a local banker who spends Dh1000 on petrol on average in a month termed it a significant cut. He welcomed the new prices which would reduce his oil bill quite significantly. "I fill up my 4X4 wheel's tank every now and then because of regular commuting between Abu Dhabi and Dubai and other emirates. And it costs me Dh170 to fill the 89.47-litre tank. So it will be a substantial saving" the banker said.

However Abrar Ali the general manager of a local transport company said the 1.6 per cent increase in diesel price can be absorbed by the freighters.

The diesel price in the market was reduced to Dh6.70 a gallon from Dh10-11 two months ago giving a substantial relief to the transport sector he said.

"The last two cuts created a lot of stir in the market as our clients started demanded 50 per cent of the total price cut to the freight charges" he said.

In transport business the diesel is the main cost that contributes 40 per cent to the total expenditure.

Many large transport companies including his own firm had to succumb to the pressure from their corporate clients with long term contracts who were given 10-12 per cent discounts he said.

Khalid Al Awaidi chief executive officer of Dubai's Hawk Consultancy said the new prices reflect the global oil prices.

He urged the need to withdraw subsidies to electricity and water also. And suggested that the UAE nationals who get financial support be given direct handouts.

The consumer price index in the UAE rose to six years high to 4.94 per cent year-on-year driven by cost of housing utilities and transportation.

"In terms of relative contribution housing and utilities contributed the most (3.88 per cent y-o-y) as 78 per cent of the inflation originates from housing/utilities. There is a huge jump in cost of transportation due to the recent increases in petrol prices" said Alp Eke a senior economist at National Bank of Abu Dhabi.

"In our opinion during 2015 Q4 inflation rate should be mainly driven by housing utilities and transportation" he said.

Contribution of transportation for September 2015 is expected to be a bit lower as the Ministry of Energy has reduced petrol prices by around 8.5 per cent the economist said.

In 2015 the GDP is expected to grow by 3.2-3.4 per cent year-on-year and drop to around $370 billion in nominal terms.

In 2015 majority of growth is expected to come from non-oil sector. Oil sector (real) is expected to remain stagnant or possibly grow marginally by one per cent year-on-year while non-oil sector (real) is expected to grow by approximately 4.5 per cent year-on-year.

Real estate and transport/communication sectors will be the main drivers of growth the NBAD economist said.