Dubai inflation jumps to 5.5% in October as petrol hike feeds through

Dubai’s annual inflation accelerated to 5.5% in October from 5.0% in September, returning to August’s rate, according to Dubai Data and Statistics Establishment figures (pdf). Prices rose 1.1% m-o-m after slipping 0.05% in September.

Fuel is mostly to blame: Transport inflation jumped to 19.3% y-o-y from 14.7%, with prices up 6.3% in October alone. Within transport, fuel and lubricants rose 53.2% y-o-y after October’s petrol hike took Super 98 to AED 4.40 a liter, 58.8% above a year earlier.

That pushed transport past housing: Transport added 2.3 percentage points to headline inflation, ahead of housing’s 2.2. It’s the first time housing hasn’t been the biggest contributor since October 2022, according to Emirates NBD research (pdf). Housing, the largest item in the basket, eased to 5.8% from 6.2% in September and 7.4% in January.

Food is the stickier problem: Food and beverage inflation hit 9.1%, its fastest pace since at least January 2010, up from 8% in September and 0.9% in January. Monthly food price growth barely slowed, easing to 1.0% from 1.1%.

A sign of life in tourism: Accommodation prices jumped 66.1% m-o-m in October but were still 11.7% below a year earlier. Emirates NBD puts the rebound down to seasonal demand and some recovery in hotel pricing power after steep declines earlier this year.

What’s next: Petrol prices fell to AED 4.15 for November, but that’s still 58.2% above a year earlier, so Emirates NBD expects transport inflation to stay elevated in November. The bank sees headline inflation holding broadly steady through year-end before easing in 2027 as oil prices moderate.

BACKGROUND- Businesses are also feeling the pinch and passing their own rising costs on to customers. Dubai firms raised their selling prices at the fastest pace on record in October, citing higher costs for raw materials, fuel, energy, freight, and rent, according to S&P Global’s PMI. We covered it last week.