Inflation in the UAE: Analysis of Economic Factors and Market Trends

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Added on  2022/12/26

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This report provides an analysis of inflation in the United Arab Emirates (UAE), focusing on economic trends and contributing factors. The report highlights that inflation in the UAE has reached 1.9%, driven primarily by rising housing and utility costs, which constitute a significant portion of consumer expenditure. The consumer price index (CPI) is also discussed, with an observed increase. The report also considers the impact of increasing construction activity and rising input prices, which are anticipated to influence consumer inflation. Data from 2012 to 2022, and references are included to support the analysis. The report underscores the importance of understanding these economic indicators for future projections.
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Running Head: INFLATION
INFLATION
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INFLATION 2
Introduction
Data shows that the rate of inflation in UAE has gone up to 1.9% this year and has been
triggered by the rise in housing and utility costs. This is the highest level ever reached since
2010. The housing utility cost rose by 39% of consumer expenditure. The prices for foods and
soft drinks increased by 2.7% in 2017 alone, the inflation rate stood at 1.97%. The consumer
price index was at 3% in March as indicated by the inflation statistics for Dubai.
Cost of housing is a primary driver of the cost of inflation in the UAE. The housing
utility cost account for approximately 39% of the client expenditure. The food and soft drinks
accounted for 14% of the basket and rose by 2%.the rate of inflation is expected to go up as of
2022.the overall inflation is however not high as it is less than 2% at the national level and it is
less than 3% in Dubai. The consumer price index has been rising and is expected to continue
rising for the rest of the year (Christof , 2019). The construction activity is also picking up and
hence making the economy to grow at a faster rate. The increasing demand is expected to drive
the input prices. Since the input prices is increasing faster than the output prices, the inflationary
pressures are expected to remain contained.as the demand increases, the producers of these
goods and services will pass the costs of inputs to the end users and hence cause an increased
consumer inflation (Kamal, 2019). The graph below shows the inflation rates since 2012.
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INFLATION 3
(Christof , 2019).
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References
Christof , B. (2019, March 2nd). United Arab Emirates: Inflation rate from 2012 to 2022.
Retrieved May 1st, 2019, from Statista: https://www.statista.com/statistics/297779/uae-
inflation-rate/
Kamal, J. B. (2019). Expected Inflation and Asset Returns:Available at SSRN 3316498. Abu
Dhabi: Routledge.
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