UAE Inflation to Rise to 3.3%

Inflation is expected to rise to 3.3% in the UAE as the 5% value-added tax in place since January and higher oil prices will trickle down to make goods and services dearer, BMI Research said in a report. The latest forecast from the Fitch subsidiary is a revision of its earlier estimate of 3.1% after BMI updated Brent pricing to $65 per barrel for 2018 from $57 previously, Yahoo reported. “This will lead to an increase in transportation prices—10% of the consumer price index basket—given that fuel prices have been deregulated since 2015. Higher oil prices will also support domestic demand, putting upward pressure on inflation,” the report said. Saudi Arabia and the UAE introduced VAT in January to narrow fiscal deficits that had widened over the last couple of years as oil prices fell from $115 per barrel in 2014 to just under $30 in the beginning of 2016. The slump in the oil market has also pushed through a more aggressive diversification program in these economies, with Saudi Arabia, the world’s biggest oil exporter looking at privatization initiatives, including the planned sale of a 10% stake in cash-cow Saudi Aramco this year.