UAE consumer prices accelerate; economic growth to hit 4.2% in 2022

The prices of consumer goods and services in the UAE accelerated in the past few months and continue to face upward risks this year due to the Russia-Ukraine crisis, but the economy is poised to improve further, according to a new report. 

The headline consumer price index (CPI) inflation stood at 3.3 percent in the first quarter of 2022 after reaching 2.3 percent in the last quarter of 2021, and could average around 2.7 percent for the whole year, the UAE Central Bank said in its latest quarterly review.  

The real gross domestic product (GDP), a measure of goods and services produced by a nation, grew 2.3 percent during 2021 and is on track to hit 4.2 percent this year. Conditions are also looking positive on the labour front, with the employment rate rising by 3.1 percent year-on-year in December 2021 and average salary rising by 7.8 percent. 

According to the central bank, the main drivers for inflation this year would be the increase in energy prices, imported inflation and rising wages, although housing rents are expected to continue their decline. 

“Upward risks remain significant due to the war in Ukraine, with potential disruption in the oil markets and supply chains, in addition to higher food prices,” the central bank said. 

Within the non-oil sector, the upward trend continued in the fourth quarter of 2021, as the lifting of lockdowns and travel restrictions fueled an increase in both local and global demand. 

Oil production went up by 9.3 percent year-on-year in the fourth quarter of 2021, in line with the agreement with OPEC+.  

Tourism, hospitality, real estate 

The tourism and hospitality sector in the UAE continued to recover, with data in Dubai showing hotel occupancy rising to 82 percent in the fourth quarter, from 63 percent and 80.6 percent in the last quarters of 2020 and 2019, respectively. 

Property prices in Dubai increased by 9.1 percent on average in the fourth quarter, while rents declined by 1.9 percent over the same period. In Abu Dhabi, the implied rental yield fell to 6.2 percent, while the average price per square metre rose for a fourth consecutive quarter, recording a 1.4 percent year-on-year increase. 




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