Aug. 14 (Bloomberg) -- Inflation in the United Arab Emirates, the second-biggest Arab economy, slowed for the first time in three months as housing and fuel prices had their biggest monthly drop in more than a year.
Inflation slowed to 1.3 percent in July from 1.7 percent the previous month, the National Bureau of Statistics said in an e-mail today. The International Monetary Fund forecasts an inflation rate of 4.5 percent for the year. Housing, fuel, electricity and water prices fell 1.6 percent from a month earlier, the bureau said. That’s the biggest monthly decline since December 2009, Bloomberg data shows.
Property prices in the U.A.E. have dropped by more than half since mid-2008 when the global credit crunch sent property markets around the world tumbling. Rents in Abu Dhabi have fallen 40 percent since the market’s peak, Jones Lang LaSalle estimates. Those in Dubai, the worst performing market in the Middle East for the past three years, have dropped 55 percent, according to Deutsche Bank AG.
“The rising supply of housing continues to pressure rents,” said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi, the U.A.E.’s second-biggest bank. “This downward pressure on rents will continue to have a moderating impact on overall inflation in the U.A.E.”
Dubai’s DFM Real Estate Index is down 17 percent this year, while the Abu Dhabi’s ADX Real Estate Index is down by 38 percent. That compares with a 7.6 percent decline in the MSCI World Real Estate Index.
Prices for oil have slumped 14 percent in New York since July 26, reaching as low as $75.71 a barrel on Aug. 9. The U.A.E. is home to about 7 percent of the world’s oil supply.
Food and beverage prices increased the most this year, rising 8.4 percent in July, mirroring a rise in global food prices this year. Furniture prices increased 4.8 percent.
Growth in the U.A.E. will accelerate to 3.3 percent in 2011 from 3.2 percent last year, the International Monetary Fund said in April.
To contact the editor responsible for this story: Andrew J. Barden at firstname.lastname@example.org.