Non-oil sector sees record price hikes as fuel costs bite

UAE non-oil firms raised their selling prices at the fastest pace on record in October, according to S&P Global’s Purchasing Managers’ Index (pdf). Input costs climbed at the fastest pace since June 2022, with fuel being a big part of the squeeze as fuel and diesel prices rose for the third month, and firms passed them on to customers. The headline reading slipped to 54.8 from 55.3 in September, which still signals growth, coming in above the 50.0 threshold separating contraction from expansion.

The good news: New orders accelerated, and new export work rose at its fastest pace in exactly two years. Hiring didn’t keep up: employment fell for the third time in five months as firms protected their margins.

That doesn’t bode well for October’s inflation figures, which we’re watching for later this month. Dubai’s annual inflation eased to 5.0% in September from 5.5% in August, but Emirates NBD Research (pdf) noted that the dip came almost entirely from a sharp fall in volatile recreation costs. Transport inflation accelerated to 14.7%, and food rose 8.1%, its fastest pace since July 2022. Housing, the biggest item in the basket, eased to 6.2%, its slowest since December. Emirates NBD expects inflation to pick up again in October as that month’s petrol hike feeds through and to end the year at around 5.6%. S&P Global’s David Owen also flagged greater inflation risk in 4Q.

The other good news: There’s some relief at the pump this month. Petrol prices fell for November after three straight months of increases.

ALSO- Dubai bucked the national dip. The emirate’s PMI rose to an eight-month high of 54.6 from 54.5 in September. New business grew at its joint-fastest pace since February, and purchasing activity rose at its sharpest in nine months. Dubai firms also reported record increases in selling prices, citing higher costs for raw materials, fuel, energy, freight, maintenance, storage, and rent. Meanwhile, supplier performance improved as more firms switched to local vendors to get around disrupted shipping routes, continuing a trend that started earlier this year. Employment edged down.