Dubai Chamber of Commerce & Industry analysis revealed that in 2009, Dubai's consumer prices fell precipitously as the falling housing and food costs meant that the emirate witnessed its lowest inflation rate in five years. According to the Dubai Statistics Center, Dubai's inflation rate stood at 4.1% in 2009 as compared with 11.3% in 2008 (table 1).
Housing, water, electricity and gas price growth, accounting for the largest share of the CPI weight, stood at 2.4% in 2009 as the combination of falling rental and property prices meant that individuals and businesses were left with more disposable income in their pockets last year (see figures 1 and 2).
In general, Dubai recorded its highest inflation rate in over 20 years at 11.3% in 2008 on the back of a surge in local rents and food prices due to higher global commodity prices and a sharp increase in its import bill due to the weakening US dollar. This trend has clearly reversed in 2009 due to the resurgence in the US dollar, falling commodity prices, a correction in the real estate sector and weakening domestic demand.
This strong drop in rental accommodation, commercial real estate and warehousing, will certainly have further positive implications for doing business in Dubai in 2010. Looking ahead, from a business perspective, a drop of inflation will increase the competitiveness of the UAE and attract more business start ups.
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