Inflation follows different paths in Saudi Arabia and the UAE

Inflation has followed very different paths in the Gulf’s two largest economies, Saudi Arabia and the United Arab Emirates, in recent months. In Saudi, consumer price inflation has continued to fall, with the headline rate coming in at 2.6% y/y in March, the lowest it has been since early 2012. This has largely come on the back of easing food price pressures. By contrast, inflation has picked up in the UAE, in part because the revival in Dubai’s property market and the removal of caps on annual rent increases in Abu Dhabi have pushed up housing inflation to its highest rate in almost five years.