Dubai’s annual inflation recorded a slight increase in May, reaching 2.37% year-on-year, up from 2.31% in April, according to the latest data from the Dubai Statistics Center. This marks a mild reversal of the steady four-month decline, which began with inflation peaking at 3.22% in January 2025.
Despite the uptick, most components of the inflation basket registered only moderate price movements, reflecting overall price stability across key sectors. Emirates NBD noted in a recent research report that inflation is expected to remain stable at current levels for the remainder of the year.
Key Inflation Drivers and Sector Performance:
- Housing, Utilities, and Fuel: The most significant component of the inflation basket continued its downward trend, rising by 6.85% y-o-y, compared to 7.02% in April.
- Food & Beverages: Prices increased slightly by 0.33%, following a 0.2% decline in April, reflecting seasonal and supply-related adjustments.
- Other Categories: Minor increases were observed in furnishing, household maintenance, restaurants, and recreation. However, growth in these categories remained modest.
Sectors Seeing Price Declines:
- Transport: Prices fell further by -8.75% y-o-y, compared to -7.64% in April. This category, which makes up just over 9% of the index, continues to be a key deflationary force.
- Information and Communication: This sector also saw slight deflation, with prices declining by 1.78% y-o-y.
Monthly, the overall Consumer Price Index (CPI) declined by 0.18%, marking the second instance of monthly deflation since July 2024.
Outlook Influenced by Geopolitics and Energy Trends:
Ongoing geopolitical developments, particularly in the Middle East, may influence inflation dynamics in the months ahead. Rising Brent crude prices, driven by regional tensions, could ease some of the downward pressure on prices.
Still, despite recent oil market fluctuations, Emirates NBD expects Dubai’s 2025 inflation to average 2.5%, slightly down from its earlier forecast of 2.8%. This reflects subdued price momentum across several major sectors.
In comparison, the Central Bank of the UAE has projected a 2.0% inflation rate for the year, closely aligning with the IMF’s latest forecast for the national economy.
Dubai’s inflation trajectory remains stable and well-managed, underlining the resilience of the emirate’s economy in the face of global uncertainties and regional dynamics.
