Dubai’s annual consumer price index (CPI) inflation rate increased to 3.0% year-on-year in November, up from 2.4% in October, according to data released on Monday.
Emirates NBD Research highlighted that this is the fastest annual price growth since August. On a monthly basis, inflation rose by 0.5%, compared to 0.2% in October.
For the year so far, average annual inflation stood at 3.3%, matching the 2023 pace. “We expect inflation to slow down to an average of 2.8% next year. Transport costs are likely to remain a drag on the overall rate, while housing will continue to be the main driver,” said Daniel Richards, Senior Economist at Emirates NBD.
Transport Costs and Petrol Prices
Transport inflation, which makes up around 10% of the CPI basket, dropped by 4.3% year-on-year in November. While this is an improvement from -10.6% in October, it explains the recent rise in overall inflation. Richards added that transport costs would likely offset other rising prices through December and into next year.
Brent futures are forecasted to average $73 per barrel in 2025, compared to $80 per barrel in 2024. Super 98 petrol prices in December were Dh2.61 per litre, showing a 4.7% month-on-month decline and an 11.8% drop year-on-year.
CPI Basket Overview
Most other CPI basket components showed mild trends:
- Food and beverages prices rose 1.1% year-on-year in November, down from 1.8% in October.
- Clothing and footwear costs dropped year-on-year, along with tobacco and communication prices.
- Household durables and maintenance costs increased slightly by 0.3% year-on-year.
Richards noted that inflationary pressures caused by disrupted supply chains in the Red Sea region have mostly eased, as businesses have adjusted routes.
Business Trends and Housing Costs
According to the Dubai S&P Global PMI survey, businesses cut their output prices for the second month in November, even though input prices rose moderately. This trend, driven by the need to remain competitive, should help stabilize consumer prices.
Housing prices, which make up 40% of the CPI basket, were the main inflation driver. In November, housing prices increased 7.2% year-on-year, the same as in October. Year-to-date, average housing inflation stood at 6.7%.
“Annual rents grew by 20.8% year-on-year in November, and housing will continue to be the biggest factor affecting Dubai’s inflation rate,” Richards stated.
