Abu Dhabi’s consumer price index continued its downward spell in May, this time falling a further 0.6% y-o-y, following a 0.1% fall in April, according to data from the Abu Dhabi Statistics Center. On a monthly basis, inflation saw a mere 0.1% increase, after it had remained unchanged at 0.0% a month before.

The annual picture: Prices rose at least slightly in most categories in May on an annual basis, led by a 17.7% price rise in the recreation and culture basket, as well as a 13.5% rise in ins. and financial services. However, this was offset by a 14.4% decline in transport prices — the second largest component in the inflation basket — as well as a 0.9% decline in food and beverage prices.

On a monthly basis, the recreation and culture segment once again saw the sharpest m-o-m rise with a 5.5% increase, followed by restaurants and hotels with a 1.2% rise. Meanwhile, clothing and footwear prices fell by 1.2% on a monthly basis.

Meanwhile, in Dubai: Dubai’s annual inflation saw a slight uptick in May, coming in at 2.37% y-o-y, compared to 2.31% in April, reversing a four-month trend of softening following January’s peak of 3.22%. However, most components of the basket showed only moderate price growth, with Emirates NBD anticipating that inflation is expected to stay around current levels for the rest of this year, the bank said in a research note.

How the UAE’s overall inflation is expected to play out this year: The IMF now expects inflation in the UAE to come in at 2.1% in 2025, in what is a slight upward revision from the fund’s earlier estimate of 2% inflation for the year. This puts the IMF’s prediction just above that of the Central Bank of the UAE, which recently lowered its inflation forecast for 2025 slightly down by a 0.1 percentage point to 1.9% due to a “continuous downward trend in transportation costs” and “moderating energy prices.

OTHER ABU DHABI MACRO NEWS-

Abu Dhabi’s industrial producer price index (PPI) rose 2% q-o-q in 1Q 2025, reversing a 1% decline in the previous quarter, according to data (pdf) from the Abu Dhabi Statistics Center. The quarterly uptick was driven by price gains in wearing apparel (+8.2%), food products (+7.7%), and rubber and plastic products (+5.8%), while declines were recorded in basic metals (-7%) and paper products (-2.3%). Prices in the petroleum products category — carrying the largest weight — rose 3.3% q-o-q.

The PPI increased 3.9% y-o-y, led by surging prices of machinery and equipment repair and installation (+28%), motor vehicles, trailers, and semi-trailers (+19.5%), and fabricated metal products (+16.3%). The steepest declines came from furniture (-18.9%) and rubber and plastic products (-12.9%), while petroleum product prices fell 3.8% y-o-y.

Meanwhile, Abu Dhabi’s construction sector saw prices rise by 0.8% q-o-q this quarter, according to new data (pdf) from Abu Dhabi’s Statistics Center. The 0.8% uptick in the construction cost index in 1Q 2025 was driven primarily by labor costs, contributing with a 69.5% of the increase through a 2.4% quarterly jump and a 6.7% y-o-y increase. On an annual basis, construction costs rose by 1.9%.

Also driving price pressures: Electrical works materials also saw prices rise by 5.9% y-o-y, though they saw a more modest rise of 0.6% on a quarterly basis.

On the other hand, segments seeing an easing in prices on a quarterly basis include the mechanical works A/C (-0.6%) and equipment (0.8%) sectors, while on an annual basis, the services segment led with a 2.8% drop in prices, while a 0.9% dip in finishing materials and a 0.5% drop in construction materials also eased overall cost growth.

PLUS- The emirate’s population grew to 4.1 mn in 2024, a 7.5% rise y-o-y and a 51% uptick since 2014, according to data from the Abu Dhabi Statistics Center. The workforce expanded by 9.1% to 2.8 mn, including 6.4% growth in professional roles.

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