Dubai’s annual inflation accelerated again in September to 2.88%, after slowing to 2.43% in August, pushed mainly by a slower decline in transport prices, according to the Dubai Statistics Center (pdf).

Housing price inflation is cooling further…: Price upticks came primarily from the housing, water, electricity, gas, and other fuels segment — the largest component of the basket at just over 40% — which softened to 5.8% y-o-y compared to 6.05% in August. September’s housing inflation reading is the lowest since May 2023, and follows on from a gradual slowdown that started earlier this year.

…and is signaling a longer term downtrend: “Base effects, a moderation in the market, and an uptick in supply will all likely contribute to an ongoing slowdown in housing costs, helping soften the headline rate,” Emirates NBD said in a research note (pdf).

Other categories seeing inflation: Food and beverages which inched up 0.15% y-o-y during the month, after sitting in deflation territory (-0.37%) the prior month. Education also rose 2.49% y-o-y, while healthcare inflation sat at a constant 1.38% y-o-y for the third month in a row, and personal care and miscellaneous goods inflation came in at 1.03%. Tobacco posted one of the sharpest gains, rising 3.66% y-o-y but holding steady on a m-o-m basis.

Recreation, sport, and culture inflation jumped 4.15% y-o-y during September, after recording -1.76% a month earlier. Clothing and footwear prices accelerated to 1.0% y-o-y after easing to 0.39% in August. Inflation in the ins. and financial services segment also inched up to 1.13% after cooling to 0.85% the month before.

The deflation of transport prices continued, albeit at a much lower rate of 0.87% y-o-y during the month, after recording -3.49% in August. This was pushed primarily by retail petrol prices, with the liter of super 98 costing AED 2.70 in September, marking a 6.9% y-o-y decrease, compared with an 11.8% dip in August. For October, Emirates BND expects that “the transport component will likely be positive for the first time since July 2024,” as petrol prices are already up 4.1% y-o-y. However, the bank rules out October fuel price spike to persist through November and December, as “the steady production increases from OPEC+ has reaffirmed our expectation of softer oil prices through Q4, and our forecast average of USD 65.0/b would be significantly lower than the Q4 2024 average of USD 74.0/b.”

REMEMBER: The Fuel Price Committee increased prices for fuel and lowered diesel’s price for September. This month, fuel and diesel prices were hiked by up to 3%.

On a monthly basis, consumer prices edged up 0.44% in September, up from 0.11% in August, according to the statistics center’s monthly inflation report (pdf).

Looking ahead: Emirates NBD revised upward its forecast for average headline inflation through year-end to 2.6%, an increase by 0.1 percentage point from its previous forecast, as it believes that “transport is unlikely to exert a drag on prices in October.” Meanwhile, CI Capital estimates the full-year annual inflation to average 2.9%, helped by lower transportation costs, according to a note seen by EnterpriseAM. Annual inflation has averaged 2.7% over the first nine months of the year, down from 3.6% in the same period last year, CI Capital added. Emirates NBD sees inflation remaining in the range of 2.5% in 2026, as housing price pressures are predicted to cool further.

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