Dubai price growth set to slow by year-end

• Price pressures in Dubai likely peaked after 5.7% y/y rise in June; monthly price gains eased to slowest pace since February.
• Faster transport and food inflation boosted headline price growth, while sticky housing-price increases kept inflation elevated.
• Consumer-price growth should slow by year-end on lower oil prices, dollar strength, easing supply-chain bottlenecks, and firms discounting in some sectors.

Annual price growth in Dubai climbed in June, as the inflationary effects of the regional conflict kept fuel costs elevated and food pressures rose. We expect price pressures to ease over the rest of the year, however.

Headline inflation rose to 5.7% year on year in June, from 5.5% in May and a little below our 5.9% forecast. Monthly price increases eased to 0.4%, from 0.5% in May, the slowest pace since February.

We think inflation peaked in June. Lower oil prices, a stronger dollar and smoother shipping flows should contain price pressures, along with discounting in some sectors...

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