Inflation in the Emirates remained negligible in January compared with a year earlier as a fall in housing costs held back any overall rise in consumer prices. The Emirates consumer price index hit 117.41 in January - representing an increase of 0.43 per cent compared with the same period last year and a 0.13 per cent rise on December. Year on year prices of restaurants and hotels rose by 3.72 per cent, while the cost of store-bought food and soft drinks increased by 2.93 per cent; transportation by 0.73 per cent; while housing fell by 1.64 per cent. Beverage and tobacco prices jumped more than 17 per cent. Month on month, small increases in dining out, housing and transportation were balanced by falls in the cost of clothing and other categories. There were also small rises in prices of beverages, tobacco, medical care and recreation and culture activities. The cost of textiles, clothing and footwear fell by 0.56 per cent, while furniture and household goods and miscellaneous goods and services were also marginally cheaper. Across the UAE, in January, inflation was highest in Dubai at 0.53 per cent. Sharjah had the second highest rate at 0.29 per cent, followed by Ras Al Khaimah at 0.24 per cent. In Abu Dhabi inflation increased by 0.16 per cent, while in Ajman it was 0.06 per cent. Fujairah recorded the smallest rise at 0.02 per cent. The figures continue a trend in the past two years where consumer price rises remained in negative territory or bumped along the zero line. Inflation briefly nudged up in the third quarter, but it was still less than 1 per cent. Data from the UAE Ministry of Economy indicated the consumer price index increased by a marginal 0.6 per cent last year, while figures from the IMF indicated it was slightly higher at 0.98 per cent. However, the margin was so small as to be negligible. There was a general agreement that prices seem to have virtually stopped rising. But some analysts say the low inflation rate may not last. "As growth continues to pick up during the course of this year and the slack in both the real estate market and the labour market gets taken up, I would expect to see the pace of inflation quicken," said Simon Williams, HSBC's chief economist for the Middle East and North Africa. Inflation could start edging up towards 3 per cent or 4 per cent, he added. "I am expecting to see, primarily through increases in rent, overall living costs start to rise, particularly in Dubai but also perhaps in Abu Dhabi." Industry specialists say the booming hospitality and retail sectors could also drive consumer prices higher if hotel occupancy surges and rising visitor numbers ease pressure on retailers to discount. A report from <a href="gopher://topicL3RoZW5hdGlvbmFsL09yZ2FuaXNhdGlvbnMvQ29tcGFuaWVzL1VBRSBjb21wYW5pZXMvRW1pcmF0ZXMgTkJE" inlink="topic::L3RoZW5hdGlvbmFsL09yZ2FuaXNhdGlvbnMvQ29tcGFuaWVzL1VBRSBjb21wYW5pZXMvRW1pcmF0ZXMgTkJE&newwin::1&nww::800&nwh::600" onclick="window.open('gopher://topicL3RoZW5hdGlvbmFsL09yZ2FuaXNhdGlvbnMvQ29tcGFuaWVzL1VBRSBjb21wYW5pZXMvRW1pcmF0ZXMgTkJE','popup', 'width=800,height=600'); return false;">Emirates NBD</a> in January said inflation was forecast to reach 2.5 per cent this year.
