(MENAFN - Khaleej Times) Dubai recorded a deflation in consumer prices in 2012 due to a drop in housing and utilities costs, Dubai Statistics Centre said on Wednesday.
On average, Dubai's consumer prices fell 1.7 per cent in 2012, the first full-year deflation since 2007, after a rise of 0.5 per cent in 2011, statistics centre data shows.
In December, prices fell 1.9 per cent year-on-year due to 6.5 per cent drop in housing and utilities costs. Housing and utility costs, which account for almost 44 per cent of consumer expenses, declined 6.5 per cent year-on-year and rose 0.1 per cent month-on-month in December.
The emirate recorded first full-year of deflation since 2007 after a rise of 0.5 per cent in 2011. - Kt file photo
The statistics centre said prices dropped 1.32 per cent in clothing and footwear category while restaurants and hotels group fell 0.24 per cent. Communication group lowered by 0.14 per cent, it added.
Food prices, which make up 11 per cent of the basket, rose one per cent on annual basis, but dropped 1.3 per cent in December from the previous month.
"Prices of food and non-alcoholic beverages group increased by 3.24 per cent. Alcoholic, beverages and tobacco group saw a price increase of three per cent, education group up by 2.85 per cent, transport group rose by 1.34 per cent, while furnishings, household equipment and routine household maintenance group climbed by 1.30 per cent. Other categories recording inflation include health group by 0.20 per cent and an increase by 0.09 per cent for recreations and culture group."
The UAE's inflation beats analysts' forecast and eased to 0.7 per cent in 2012 compared to 0.9 per cent in 2011, according to data released by National Bureau of Statistics.
The bureau also announced in December Consumer Price Index that shows year-on-year inflation edges up 0.6 per cent in the last month of 2012.
Housing and utility costs, the index heavy weight, fell 1.1 per cent year-on-year and the group was flat last month on month-on-month basis. Food prices, around 14 per cent of the index, jumped by two per cent on yearly basis, but eased by 0.2 from the previous month.
The UAE Minister for Economy Sultan bin Saeed Al Mansouri said last week that inflation in the UAE should remain firm at 1-1.5 per cent this year. It eased to 0.7 per cent in 2012, the lowest level since 1990, when Iraq's invasion of Kuwait hit regional economies, from 0.9 per cent in 2010 and 2011.
The minister said that the country's economy is estimated to have grown by around four per cent in 2012, at a pace higher than the rate forecast by the International Monetary Fund. He also predicted that the same of pace of growth would be sustained in 2013.
Analysts believe that the UAE's growth would continue to be fuelled by increased government spending as prices of crude are expected to hold steady at slightly above 108 per barrel in 2013.
According to HSBC UAE Purchasing Managers' Index, overall input prices continued to increase in the UAE non-oil producing private sector during December. The rate of input price inflation eased and was the lowest since September 2010.
While average purchase prices increased at a similar pace to November, the rate of wage inflation was slightly lower than in the previous month. The main reasons behind the latest inflation were general inflationary pressures and increased living costs, respectively, HSBC report said.