Headline consumer price index to average 1.8 percent in 2017, says BMI Research
Inflation in the UAE will stay low throughout 2017 as the impact of subsidy cuts wears off, a report has concluded.
The headline consumer price index (CPI) will average 1.8 percent over the course of the year, the joint-lowest annual averag e for six years, according to the latest paper from BMI Research.
The impact of subsidy cuts made throughout 2015 and 2016 is likely to wear off, while the continued strength of the US dollar – to which the UAE dirham is pegged – and subdued economic growth will combine to keep inflation “very low”.
House price inflation is set to remain deflationary in line with a broader slowdown in the regional economy and a significant increase in construction activity anticipated in 2017, the report said.
It added that inflation is expected to be higher in Dubai than Abu Dhabi, though, because of the lower level of subsidies in Dubai.
Housing and food will be the main drivers of inflation in 2017, the report added.
It said the UAE Central Bank is set to follow the US Federal Reserve’s fiscal tightening measures as the dirham is pegged to the dollar.
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