Lower petrol prices drop inflation in Abu Dhabi
The consumer price index in Abu Dhabi dropped 0.2 per cent in November 2015 in a month-on-month comparison reflecting the adjustments in petroleum prices. The transport group which is an important element in the CPI dropped significantly by three per cent in November. Another notable decline were reported in the furnishings household equipment and routine household maintenance segment which dropped by two per cent. On October 28 the UAE Ministry of Energy adjusted petroleum prices by up to 5.5 per cent with effect from November 1. In July this year the government gradually withdrew the subsidies on petroleum products. Gasoline prices at the pump during November were slightly less than the pre-August subsidised prices. Initially the petroleum prices increased drastically after the subsidies were withdrawn and in August as annual inflation reached 4.94 per cent year-on-year the highest since February 2009. "With the gasoline prices declining consecutive months I expect October and November annual inflation to be lower than four per cent year-on-year. In my opinion average annual inflation for 2015 is expected to be around 4.1 per cent year-on-year" Alp Eke economist at National Bank of Abu Dhabi had told Khaleej Times on November 26. UAE households spend approximately 11 per cent of their budget on transportation and lower gasoline prices would positively impact real income and purchasing power. "Obviously less money spent at the pump means more cash is available to spend somewhere else or save" Eke said. "We are the approaching holiday season; maybe there will be slight increase in spending by the local population but most probably expats [who constitute almost 8.5 million] will have a bit more cash which they will prefer to save and then send as remittances to their families." The drop in consumer prices decreased consumer prices for UAE citizens by 0.4 per cent while it resulted in decreases of 0.1 per cent in consumer prices for households of the bottom welfare level 0.3 per cent for households of the middle quintile and 0.2 per cent for the top welfare level. -
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