Inflation in the UAE is expected to decline substantially from 3.3 per cent in 2018 to 1 per cent in 2019, Khaleej Times reports.
Inflation in the UAE is set to decline substantially this year, lower oil prices, strengthening dirham against floating currencies and a fading out VAT impact, making the UAE more affordable in 2019, analysts say. The impact of VAT on inflation had been limited with a small increase in January 2018 largely dissipating by mid-year. Inflation is widely expected to stay closer to the range of 1 per cent in 2019, substantially declining from over 3 per cent in 2018.
The Central Bank of the UAE had projected year-on-year inflation at 3.6 per cent in 2018 in its third-quarter report last year and it will fall to 2.5 per cent in 2019 due to lower oil prices. Other key factors that will drive down the inflation include freezing of school fees by Dubai as well as reduction and waiving off of fines for the small and medium enterprises across the UAE in order to reduce the cost of doing business in the country.
International Monetary Fund has said that inflation in the UAE is expected to remain low this year, notwithstanding the introduction of the value-added tax (VAT) earlier in 2018. The impact of VAT on inflation had been limited with a small increase in January 2018 largely dissipating by mid-year. Average consumer price index (CPI), as per IMF figures, jumped from 2 per cent in 2017 to 3.5 per cent in 2018, but it is forecast to drop to 1.9 per cent in 2019.