UAE inflation at 3-month high
Inflation in the United Arab Emirates climbed to a three-month high of 1.4 per cent on an annual basis in May and edged up from the previous month as food prices continued to rise, data showed on Saturday.
Consumer price growth in the world's No 3 oil exporter floated around 1 per cent for most of 2010.
Inflation has remained low this year at 1.1 per cent in April.
On the month, living costs rose 0.2 per cent in May after five monthly declines in a row, data from the National Bureau of Statistics showed.
Analysts polled by Reuters in March expected average inflation in the second largest Arab economy to quicken to 2.5 per cent in 2011 from 0.9 per cent last year, which was the lowest annual level since the Gulf war started in 1990.
"We expect to see a lower inflation environment remaining in the UAE in 2011 and the continuation of weakness in rental prices," said Monica Malik, chief economist at EFG-Hermes in Dubai.
"We see food prices as the key driver of inflation but this is also moderated by the government's talks with retailers to maintain prices of essential goods," she said.
Food costs, which account for 14 per cent of consumer expenses in the $298 billion UAE economy, jumped 1.3 per cent month-on-month in May, the same pace as in the previous month, the data showed.
The UAE government has called on retailers to offer discounts of up to 50 per cent in Ramadan, which begins in August, when food prices usually surge.
In May, the UAE said it planned to combat rising global commodity prices by fixing the cost of about 400 foodstuffs and household products at 70 outlets.
Housing prices, the largest basket item with a 39 per cent share, fell 0.1 per cent on a monthly basis in May in a sixth consecutive decline as the property sector remains weak. Transport costs rose 0.1 per cent, slightly slower than in April.
In March, the Gulf country's central bank governor said inflation was not a worry, adding that consumer price growth should range around very low single-digit rates.