UAE: Inflation set to drop next year, says Minister of Economy

Inflation in the UAE is one of the lowest in the world and it’s expected to drop further next year, said Abdulla bin Touq Al Marri, Minister of Economy.

“We have seen the last six months of global turbulence. But it’s the UAE’s agility that puts it on the global map. Inflation in the first nine months was 5.5 per cent, one of the lowest in the world. We are looking at inflation going down further next year,” Al Marri said at a press conference on Tuesday.

He pointed out that the country imports quite a large chunk of goods from non-dollar-based regions which helps beat the inflation due to the strengthening of the dirham, which is pegged to the dollar.

The International Monetary Fund (IMF) said in its 2022 Article IV Mission to UAE that the inflationary pressures are expected to moderate gradually.

“Inflation has risen with global trends and is expected to average just over 5 per cent this year… We welcome the targeting of temporary fiscal support to the most vulnerable to alleviate the impact from higher inflation but note the importance of maintaining a prudent overall fiscal stance, supporting efforts to mitigate inflation, and enhancing buffers to ensure medium-term sustainability,” IMF said.

The Minister was speaking at the launch of the “Future 100” initiative to support 100 startups in new sectors that will shape the future economy of the UAE. Ohood bint Khalfan Al Roumi, Minister of State for Government Development and The Future; and CEOs representing local and international companies, startups, as well as entrepreneurs in the UAE, attended the launch event on Tuesday.

Abdulla bin Touq added that the Comprehensive Economic Partnership Agreement (Cepa) with other countries will help ensure enough supply of basic commodities and reduce inflation in the country.

The UAE has signed three Cepa deals and plans to have 26 over the next seven to eight years.

“We monitor inflation on a day-to-day basis and prices on shelves in retail outlets. We monitor prices that go up and down every week. We speak to retailers and wholesalers, too. We recently got the support from the Cabinet to involve more in price-setting to ensure prices are good for consumers,” said the Minister.