UAE: New discount markets, price controls, dollar peg; how the country managed to rein in inflation amidst global turmoil

UAE: New discount markets, price controls, dollar peg; how the country managed to rein in inflation amidst global turmoil

Euromonitor said inflation in the UAE and Saudi averaged around five per cent and 2.5 per cent, respectively, last year

Published: Tue 25 Jul 2023, 11:15 AM

Inflation in the UAE and Saudi Arabia was low despite global turmoil, thanks to government-imposed price controls, the dirham’s peg to the dollar and the growth of discounters, hypermarkets and e-commerce.

According to Euromonitor International, the UAE and Saudi Arabia set “exemplary standards” in reining inflation amid global economic headwinds due to the Russia-Ukraine crisis and climate change exacerbating prices of foods and commodities globally.

Euromonitor said inflation in the UAE and Saudi averaged around five per cent and 2.5 per cent, respectively, last year.

Global inflation rose to an average of 8.8 per cent in 2022 from 4.7 per cent in 2021, but UAE inflation averaged 4.8 per cent last year and is projected to fall to 3.2 per cent, according to the UAE Central Bank.

Economists expect the consumer price index in the UAE to drop this year and next. Oxford Economics forecast the consumer price index in the Emirates falling from 4.8 per cent last year to 3.4 per cent in 2023 and 2.2 per cent next year.

Currently, the UAE retail market is dominated by Carrefour,