Abu Dhabi’s January inflation rate hits 4.7 per cent
ABU DHABI 7 March 2018: Inflation in consumer prices in the UAE capital reached 4.7 per cent in January 2018 as compared to the same month in 2017.
This came in a report developed by the Statistics Center Abu Dhabi in coordination with the Department of Economic Development (DED) in Abu Dhabi which analyses the calculation of the consumer prices index for the month of January 2018 on the basis of the year 2014 in conjunction with the implementation of the valued added tax across the country starting from last January.
In its analysis the DED explained that this reflects the presence of other factors that helped increase the prices of those groups beside the implementation of the Value Added Tax (VAT). The most notable of these factors is that the prices of the tobacco and soft drinks group increased by 100.3 per cent whereby it was affected by the implementation of the selective tax as of October 2017.
The report included the results of the calculation of the consumer prices index according to the welfare level, family type, geographical area, and the contribution rate of the major groups to the prices annual change. The consumer prices index basket twelve groups, including eight groups that are subject to the VAT and three groups that are not (transportation, education and health), in addition to one group that is partially subject through some of its components. This group is the residence, water, electricity, gas and other fuel types group.
Based on the report’s results, inflation in the consumer prices reached 4.7 per cent in January 2018 compared to the same month in 2017 where the index reached 112.7 per cent in January 2018 compared to 107.6 per cent in January 2017. Also, the consumer prices index increased by 3.0 per cent during January 2018 compared to the index in December 2017.
The DED stated in its analysis of the report that the increase in consumer prices inflation in January 2018 is completely reasonable compared to the results of January 2017 as a result of the implementation of the value added tax in the country at 5 per cent which started last January. This caused an increase in the groups of the consumer prices index basket in Abu Dhabi, especially those that are subject to the tax.
Transport
The report explained that the “transportation” group contributed by 38.5 per cent of the total increase rate that was achieved in January 2018 compared to January 2017, whereby the prices of this group went up by 13.2 per cent. Also, the “Miscellaneous goods and services” group contributed with 17.8 per cent of the total increase rate which was achieved in January 2018 compared to January 2017 whereby the prices of this group increased by 12.4 per cent.
The DED also mentioned in its analysis that at the level of the groups that were not subject to the value added tax two of these groups witnessed an increase in the prices in varying rates that exceeded that tax rate for the transportation group, whereas the prices of the health group saw slight decrease.
Moreover, it pointed out that some of the groups that are subject to the tax witnessed a change in its prices that was less than the tax rate, as the case with the telecommunications group, and the fixtures, house equipment and usual house maintenance works group.
Food & Drinks
Regarding the “food and drinks” group, the Statistics Center’s report mentioned that this group contributed to 17.6 per cent of the total increase rate which was achieved in January 2018 compared to January 2017, whereby the prices of this group went up by 7.1 per cent. Also, the “promotion and culture” group contributed to 10.6 per cent of the total increase rate which was achieved in January 2018 compared to January 2017 whereby the prices of this group increased by 12.0 per cent.
Regarding the “residence, water, electricity, gas and other fuel types” group, the report explained that this group contributed to a decrease in inflation in January 2018 compared to January 2017 with a rate of 19.6 per cent. This impact came as a result of a decrease in the residential rental rates by 2.7 per cent and as a result of the weight of this group which reached 31.2 per cent.
Rentals
In this regard, the DED explained in its analysis that the residential rental rates represent 30 per cent of the total family expenditure in Abu Dhabi, and as a result of the increase in the weight of this group, the drop in its prices contributed to a less inflation increase during last January, and at the same time it contrasted the implications of the increase of some of the group within the consumer prices index basket whose weights are considered much less. Also, it is important to mention that the final impact of the increase in the prices of the groups that are subject to the tax on the consumer prices index has been significantly displaced due to the decrease in the rental rates within the residence, water, electricity and gas group.
It also added that the relative contribution of the majority of the groups that are subject to the value added tax to the total change in the consumer prices index for the month of January 2018 compared to January 2017 was larger compared to the relative weights of those groups within the consumer prices index basket. This reflects the impact of the increase in the prices of these groups.
Family Groups
The Statistics Center further explained that the consumer prices rates for families in the “low” welfare category increased by 4.8 per cent during January 2018 compared to January 2017. Also, the consumer prices rates in the “intermediate” welfare category increased by 4.5 per cent, whereas the “upper” welfare category increased by 5.0 per cent.
Moreover, it pointed out that the increase in consumer prices during January 2018 compared to January 2017 influenced the consumer prices rates for the national families which led to increase by 5.0 per cent in the same. It also impacted the consumer prices for the non-national families category which increased by 4.4 per cent, whereas the group families category increased by 5.2 per cent.
By Region
Additionally, the Center stated that Abu Dhabi region contributed 54.9 per cent to the total increase that was achieved in the price rates in the Emirate of Abu Dhabi which reached 4.7 per cent in January 2018 compared to the same month in 2017, whereas Al Ain and Al Dhafra regions contributed 37.9 per cent and 7.3 per cent to the total increase during the same periods, respectively.