Fuel prices account for 36% of inflation in UAE

Speaking of the current situation, Mr. Akbar Fakhruddin the Chairman of Fakhruddin Properties, said,

"According to our market study, the basic three contributors to the ongoing soaring inflation are the skyrocketing rent of residential units, injecting unprecedented levels of liquidity in the UAE market by offering banking facilities on personal loans worth up to 25 times the person's salary, and the global increase in fuel prices, which account for 36% of the inflation in UAE economy, according to a report recently issued by Abu Dhabi Chamber of Commerce and Industry, as fuel prices impact operations in such sectors as energy, transport and construction."

"As we determine the causes, we should suggest solutions," continued Fakhruddin." The rising rent of residential and commercial units can be controlled by developing more residential projects. We believe that the property market will stabilise once the mega projects currently under construction, which are projected to address the current shortage within 3-5 years, have been completed. Regarding the issue of personal loans, we expect the UAE central bank to intervene and issue a new loan limit cap to confront the Dhs12.5bn rise in loan issuing within a year in a bid to gradually reduce liquidity flow to the market."

"And I think that combustibles prices should be subsidised in order to reduce operational costs, as the Government has the capability to support this sector. This will help to contain inflation and restrict it to reasonable rates, paving the way to gradually eliminate the rise in inflation," he concluded.

Economic and property analysts have been proposing measures to combat the rise in inflation, the most recent of these proposals was the call for the UAE Ministry of Economy to put out an index that would calculate the inflation rate in a move to arrest spiraling inflation.

This proposal is under study, and some sources have revealed that, in a move unprecedented in the world, a survey system will be established to measure the inflation rate in the country every four months.