Recent data indicates that transportation and food prices have eased, leading to a decrease in the consumer price index (CPI) in Dubai last month.
As per Emirates NBD Research, the overall CPI inflation in Dubai decreased to 2.8 percent year-on-year in March, down from 3.2 percent in the preceding two months, marking the lowest annual price increase since October of the previous year.
In comparison to February, prices saw a slight decline of 0.1 percent, representing the first month of deflation since July 2024. The average inflation rate for the first quarter was recorded at 3.0 percent year-on-year, narrowly missing Emirates NBD’s prediction of 2.8 percent.
Emirates NBD forecasts that price increases for the remainder of the year are expected to be less aggressive than those observed in the first quarter. “We anticipate a softer inflation trend in the coming months, primarily due to the significant decline in global oil prices witnessed in April. This reduction will be mirrored in fuel costs and the transportation segment, which constitutes just over 9 percent of the overall index,” stated Daniel Richards, Senior Economist at Emirates NBD Research, in a report.
The transportation sector has played a crucial role in keeping overall inflation in check in recent months. Specifically, in March, transportation costs fell by 3.3 percent year-on-year, indicating that the price for a liter of super 98 gasoline in March 2025 was 9.9 percent lower than in March 2024. “In April, gasoline prices were 18.4 percent less than a year ago, suggesting a more pronounced impact from transportation costs on forthcoming inflation data and throughout the rest of the year,” Richards added. Emirates NBD projects that Brent crude will average $68 per barrel this year, a decrease from $80 in 2024.
Impact on Housing
The primary contributor to inflationary pressure in Dubai continues to be housing and utilities, which account for the largest share at 40.7 percent and are experiencing the fastest price increases. In March, this sector saw a 7.2 percent rise year-on-year, a slight reduction from the near-decade high of 7.4 percent recorded the previous month, yet still exhibiting significant inflationary trends. “This trend reflects ongoing price hikes in the housing market, with minimal changes in utility costs. Although there are signs of stabilization in the Dubai property market, with price growth appearing to plateau, rental prices for apartments have still increased by approximately 8 percent year-on-year in Q1, while villas and townhouses have risen by around 20 percent,” Richards elaborated.
According to Emirates NBD, other components of the CPI basket are either experiencing minimal price growth or outright deflation. The second largest category after housing—food and beverages—saw prices decline by 0.3 percent year-on-year in March, even with the coinciding holy month of Ramadan. This marked the third consecutive month of falling food prices. Meanwhile, restaurant and accommodation prices softened to 0.3 percent down from 0.7 percent year-on-year in February, and clothing and footwear saw a 2.7 percent decline year-on-year for the second month in a row. Participants in the S&P Global PMI survey for Dubai did note a marginal rise in output prices during March, though the increase was minimal as competition within the market remains high.