Following a big jump in inflation in 2018 after the implementation of a

5 per cent value-added tax, some economists believe that the UAE
economy will slip into deflation this year following a persistent decline
in housing and fuel prices and an oversupply in the retail and
hospitality sectors.
The January 2019 drop in prices was concentrated in certain major
components of the inflation basket, driving the deflation. Notably,
housing and utility prices contracted by 5.8 per cent on a year-on-year
basis in January, reflecting the ongoing moderation in rental costs.
Transportation prices fell 6.4 per cent year-on-year on the back of the
plunge in the oil price at end-2018. Food prices also dropped by 1.1
per cent year-on-year in January, likely reflecting VAT falling out of the
data
Deflation occurs when the inflation rate falls below 0 per cent - a
negative inflation rate. Inflation reduces the value of a currency over
time, but deflation increases it.

anita Yadav, senior director and head of fixed income research at

Emirates NBD, says inflation in the UAE is expected to fall below 2 per
cent in the current year as job growth remains muted. Also strength of
the dirham against its major trading partners will keep imported
inflation low.

"We do not expect deflation in the UAE over the forecast period. That
said, the decline in inflation going forward is likely to come mainly from
falling housing costs and low energy and food prices. Also, last year's
inflation was impacted by introduction of VAT which will drop off in the
current year-on-year calculations," said Yadav.

What inflation? Cost of living set to

decrease in UAE in 2019
Waheed Abbas/Dubai
Filed on March 11, 2019 | Last updated on March 11, 2019 at 06.16 am
In United Arab Emirates, the main components of the consumer price index
are: Housing (34.1 percent of the total weight); Food and Soft Drinks (14.3
percent) and Transportation (14.6 percent). Education accounts for 7.7
percent; Miscellaneous Goods and Services for 6.3 percent; Furniture and
Household Goods for 5.6 percent and Communications for 5.4 percent. Others
include: Restaurants and Hotels (4 percent); Recreation and Culture (3.2
percent); Textiles, Clothing and Footwear (3.2 percent); Medical Care (1.4
percent) and Beverages and Tobacco (0.3 percent). The national index has a
base of 100 as of 2014. 

https://www.fxempire.com/macro/united-arab-emirates/inflation-rate
Consumer prices in the United Arab Emirates decreased 1.3
percent year-on-year in February of 2020, the same pace as in the
previous month. This was the fourteenth straight month of
deflation, amid lower prices of housing (-4.6 percent vs -4.9
percent in January); miscellaneous goods & services (-4.2
percent vs -0.8 percent); textiles, clothing & footwear (-4.8
percent vs -7 percent); restaurants & hotels (-0.7 percent vs -2.9
percent) and furnishings (-2.8 percent vs -2.2 percent). Meantime,
inflation slowed for recreation & culture (10.7 percent vs 15.9
percent) and transport (3.1 percent vs 3.8 percent). Conversely,
prices rebounded for food & beverages (0.5 percent vs -1.7
percent). On a monthly basis, consumer prices went down 0.3
percent, after dropping 0.1 percent in the previous month.
https://tradingeconomics.com/united-arab-emirates/inflation-cpi