Abu Dhabi residents tired of rental increases may have something to cheer about.
The consumer price index for last month suggests that rents are steadying following a year of high growth. On the other hand, food prices have increased ahead of Ramadan.
The Abu Dhabi Statistics Centre, also known as Scad, said inflation in May rose 0.2 per cent from the previous month, suggesting that year-on-year inflation, which it did not specify, was more or less unchanged at 5.2 per cent.
Scad did not give weightings for the basket of goods and services it uses but house rents typically make up the largest share of the index.
Food and beverage prices rose the most in May of all the goods and services surveyed, adding 2.8 per cent.
“Inflation in Abu Dhabi has been on an upward trend and that has been largely driven by rent,” said Razan Nasser, a senior Middle East and North Africa economist at HSBC based in Dubai.
“However on the longer term trend, we expect that inflation is likely to have reached its peak because housing prices, which have been the main driver of price growth, are expected to soften throughout this year and that should cool inflation along with it.”
Housing rents in Abu Dhabi alone rose by 12 per cent last year and another 2 per cent in the first quarter of this year despite the oil retreat, according to data from the property broker CBRE.
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