Dubai inflation eases despite rising fuel costs

Dubai’s inflation rate eased slightly in September compared with August, even as higher oil prices lifted the cost of petrol.

Inflation figures

The annual inflation rate stood at 5.03 percent, down from 5.54 percent in August and below the 5.7 percent peak for this year reached in June. The month‑on‑month change in the General Monthly Consumer Price Index was a fall of 0.05 percent, driven by lower airfares and cheaper holiday packages. Airfares dropped 23.44 percent on a monthly basis and holiday packages fell 12.47 percent from the August level. These data were released by the Dubai Data and Statistics Establishment on Tuesday.

Transport sector pushes prices up

Despite the monthly dip, the transport division was the biggest contributor to the rise in consumer prices on an annual basis in September, increasing 14.7 percent. This rise was fuelled by a 37.52 percent jump in the cost of fuels and lubricants for personal transport and a 13.48 percent increase in passenger transport by air, according to the latest government figures. The transport segment, which makes up 9 percent of Dubai’s Consumer Price Index basket, has been the main driver of inflation in the emirate over the past several months as petrol prices have risen. The UAE lifted fuel subsidies in 2015, and fuel prices are reviewed monthly according to global market movements.

Broader economic picture

Dubai’s economy has largely avoided the deeper slump seen in some neighbouring states. Non‑oil private sector business activity, a key component of the emirate’s status as a major business and tourism hub in the Middle East, continued on a sharp growth trajectory. The Purchasing Managers’ Index reached 54.5 in September, up from 54.1 in August, signalling a “solid improvement” in Dubai, with the pace of growth described as the fastest in 2026 by S&P Global Markets Intelligence earlier this month. The uptick in non‑oil activity was mainly driven by a “sharp and accelerated increase in output”, accompanied by marked rises in new orders and employment, according to the PMI survey data.

Cost pressures in other categories

The tourism and retail sectors have rebounded from the initial shock of the war, while property, another top contributor to the emirate’s economy, has held up relatively well. In September the food and drinks category rose by an annualised 8.05 percent, and the housing, water, electricity, gas and domestic fuel group increased by almost 6.23 percent, “as a result of the growth of the average residential rental prices in most areas of the emirate during September”, the latest government data shows. Petrol prices in the Emirates rose for a third consecutive month in October as global oil prices remain elevated amid escalating geopolitical concerns in the Middle East. Global crude prices surged by nearly 109 percent during the peak of the war, now in its eighth month, and remain more than 70 percent higher due to fears of a possible resumption of fighting between the United States and Iran. Brent crude hovered around $110 per barrel in September and has largely stayed above $100 in recent weeks, while the West Texas Intermediate benchmark passed $105 a barrel in the same month as the Strait of Hormuz remained a flashpoint. Increased attacks on Saudi infrastructure in the Red Sea by Houthi rebels from Yemen have added further risk to energy supplies from the region.