Dubai inflation falls thanks to lower transportation costs

Inflation in Dubai fell in February as transportation costs dropped.

The consumer price index fell to an annual rate of 1.43 per cent last month from 1.91 per cent in January, official data showed yesterday.

Transport costs, which account for about 9 per cent of the consumer price index basket, fell 6.6 per cent year-on-year in February. Clothes and shoes, which have a 5.5 per cent weighting, dipped 4.8 per cent.

Prices in Dubai have dropped with the slide in oil prices, which have lost more than 65 per cent of their value to less than $40 per barrel since mid-2014, when oil prices were above $100 per barrel.

Inflation in the UAE rose last year to 4 per cent from 2.3 per cent a year earlier, with the biggest increase coming from the housing, water, electricity and gas segment.

Low inflation in Dubai is also linked to slower economic activity.

Dubai’s economy began to shrink last month for the first time since 2010, according to a survey.

The Dubai Economy Tracker, a monthly assessment of business activity in the emirate pro­vided by Emirates NBD, recorded a score of 48.9 last month. Any score below 50 indicates that the economy is contracting.

This is the first month since the data series began in 2010 that the index has slipped into negative territory.

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