Abu Dhabi’s annual inflation accelerated slightly to 1.6% in January, up from 1.5% in December, according to the latest data (pdf) from the Abu Dhabi Statistics Center. On a monthly basis, however, the consumer price index declined 0.1%, reversing a 0.4% increase the previous month, according to separate data (pdf).

Housing and food led the charge: The primary upward pressure on the annual figure remains the housing, water, electricity, and gas sector, which holds the biggest weight on the index, surged 4.5% y-o-y in January — marking its highest growth rate since January 2022. Other notable annual increases include the food and beverages sector, which accelerated sharply to 1.7%, up from 0.6% in December, and the restaurants and hotels category also climbed 1.9% y-o-y. Recreation and culture saw a significant turnaround, swinging from a 5.0% contraction to a 0.9% increase. Other sectors showing a cooling trend include communications, which slowed to a near-flat 0.2%, and tobacco, which eased slightly to 0.6%.

“This inflationary trend may be partially driven by a surge in demand-pull inflation, resulting from the significant momentum in new company formations and broader economic activity in Abu Dhabi, particularly throughout 2025. However, I believe supply-side shocks remain the primary drivers,” MENA Economist Hamzeh Al Gaaod tells EnterpriseAM.

While the annual headline figure rose, several sectors showed cooling trends or monthly volatility, with the clothing and footwear category jumping 4.4% m-o-m, despite being down 8.4% on an annual basis. Conversely, transport — the second-largest component of the basket — fell 4.0% m-o-m and was down 2.6% y-o-y. Monthly increases were also seen in recreation and culture (+1.4%), food and beverages (+1.0%), and personal care (+0.6%).

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