According to a report in Bloomberg, inflation in the United Arab Emirates, the second-largest Arab economy, sped up to 0.9 percent in May, the fastest in the year as the cost of education and food increased.

During the month, the consumer prices changed a tad at – 0.07 [...]]]>

According to a report in Bloomberg, inflation in the United Arab Emirates, the second-largest Arab economy, sped up to 0.9 percent in May, the fastest in the year as the cost of education and food increased.

During the month, the consumer prices changed a tad at – 0.07 percent, according to data released today on the UAE statistics Office’s site. In April, the inflation was at 0.8 percent.

Inflation has accelerated for the last three month after the UAE faced deflation from plumetting real estate costs and sluggish global trade. Real estate prices in Dubai, the UAE’s second biggest emirate dropped by 50% after reaching their peak in mid 2008.

Tej Kohli believes that the main drivers of inflation are food costs and education. He said that the overall level of inflation is still quite low, and there are important deterrents to soaring inflation getting ahead.

While the prices of food and soft drinks rose to an annual 1.2 %, the cost of education advanced to 0.7%. Housing costs dropped by 0.5 %.

According to Kohli, three factors will keep the inflation subdued – supply of housing, stronger dollar and the tightness of monetary policy. This year may see inflation of 1%, rising to 2.5% by 2011.

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