Inflation in UAE, GCC countries set to spike this year

Inflation in UAE, GCC countries set to spike this year

Higher commodity prices will also cause external positions to deteriorate further

Published: Sun 29 May 2022, 5:28 PM

Inflation in the UAE, Gulf Cooperation Council (GCC) countries and the wider Middle East and North Africa region will spike this year due to an increase in food and commodity prices after the Russia-Ukraine war, say economists.

“The UAE economy has had a strong start to 2022, with crude oil production up 12 per cent year-on-year in the first quarter of this year. Survey data points to a solid expansion in non-oil sectors as well. We expect inflation to average 4.3 per cent this year from 2.3 per cent previously, significantly higher than last year’s 0.2 per cent average consumer price index,” said Emirates NBD Research in a recent quarterly report on the region.

It is projected that the inflation will ease to 2.5 per cent for the UAE next year.

While inflation in most of the other Gulf countries will also witness a surge this year, with average inflation reaching 3.0 per cent, 3.5 per cent, 2.5 per cent, 3.5 per cent and 3.0 per cent in Saudi Arabia, Qatar, Oman, Kuwait and Bahrain, respectively.

The increase in inflation is attributed to the impact of the Ukraine-Russia