Dubai CPI accelerated to 3.6% y/y in January

Dubai CPI accelerated to 3.6% y/y in January

27 February 2024, Emirates NBD

Dubai’s CPI declined -0.3% m/m in January as lower transport, recreation and hospitality services prices offset a 0.9% m/m rise in food costs and a 0.5% m/m increase in housing and utilities costs. On an annual basis however, CPI inflation accelerated to 3.6% y/y in January from 3.3% in December. While annual food inflation has slowed from November and December, housing costs rose 6.2% y/y last month. Insurance and financial services costs also rose sharply to 13.3% y/y but have a very small weight in the consumer basket. We expect housing costs to remain a key driver of overall inflation this year, even as most other components of the basket see price growth slow. We forecast average CPI at 3.0% in 2024, down from 3.3% in 2023.

Japan’s CPI came in higher than forecast at 2.2% y/y in January, although lower than the 2.6% recorded in December 2023. Excluding fresh food, core inflation slowed to 2.0% y/y from 2.3% in December. The main driver of higher inflation last month was foreign travel packages, and overall services inflation remained above 2% y/y. Inflation coming in higher than forecast is supportive of the BoJ’s expected normalization of monetary policy this year.

New home sales in the US rose by smaller than forecast 1.5% m/m in January, while the December data was revised lower. Mortgage rates have eased in recent weeks, and supply grew by 456k in January, the most in over a year, suggesting that sales could recover in the coming months. Separately, the Dallas Fed Manufacturing Activity Index improved sharply in February to -11.3 from -27.4 in January. Texas firms’ outlook for the coming six months also improved from January.



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