Dubai’s annual inflation continued to dip in April, coming in at 2.31% y-o-y, compared to 2.79% in March, and extending a softening trend since January’s peak of 3.22%, according to the Dubai Statistics Center (pdf). The decline was mostly due to a “meaningfully lower petrol price offsetting still elevated upwards pressure on housing,” Emirates NBD said in its research note.

The breakdown: Prices for housing, water, electricity, gas, and other fuels — the largest component in the inflation basket — remained elevated, rising 7.02% in April, slightly down from 7.16% in March but on a downward trajectory since the beginning of the year, moderating to a seven-month low. Furnishing, household equipment and routine household maintenance, along with restaurants and accommodation and recreation, sports, and culture, also recorded slight price growth.

REMEMBER- Fuel prices were slashed around 5-6% in April, and while they saw a slight uptick in May, Super 98 is still 22.8% lower than last year, so fuel is expected to keep inflation moderate this month, Emirates NBD said.

Segments seeing deflation: Transport prices, making up just over 9% of the index, slipped further to -7.64 y-o-y in April, compared to -3.34% y-o-y in March. Food and beverages, clothing and footwear, and information and communication, were among the sectors that saw deflation. “The deceleration was driven by base effects and a sharp drop in transport prices,” National Bank of Kuwait’s Issa Hijazeen told EnterpriseAM.

On a monthly basis, prices grew 0.29%, returning back to inflation territory after March saw the first instance of monthly deflation since July 2024, according to monthly figures from the statistics center’s monthly inflation report (pdf). A rebound in the prices of restaurant and hotel segments and food prices, led the uptick in monthly inflation, Hijazeen said.

Looking ahead: Emirates NBD has revised downwards its forecast for inflation to 2.5%, from 2.8% earlier, due to the downward pressure on oil prices expected throughout the year and as other components of the basket show weak price growth, according to the note. Hijazeen agrees, saying that “Dubai’s inflation is expected to moderate further, supported by easing housing rents and a potential decline in fuel prices.” The Central Bank of the UAE (CBUAE) had pencilled in a 2.0% inflation rate for the country this year, almost matching the IMF recent estimate.

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