The United Arab Emirates central bank expects consumer prices to start rising again in the second half of 2021.

Prices dropped an average -0.3 per cent in the first six months of 2021, the Gulf country’s central bank said in its economic quarterly review. This is because real estate prices and private consumption are still recovering from the coronavirus pandemic and the rout in oil prices, but “a move into positive territory is expected to start in the second half of 2021,” the regulator said.

The Gulf nation’s Consumer Price Index has been deflationary since 2019, weighed down mainly by its real estate basket, which accounts for more than a third of the gauge.

Property prices in Dubai, one of the UAE’s seven emirates and its main travel destination, declined an average 5.5 per cent on an annual basis during the first quarter of the year, while rents fell about 4.3 per cent. In the capital, Abu Dhabi, residential property prices marked their first year-on-year gain in more than five years, according to the review.

The UAE central bank pegs its currency to the dollar and monetary policy tends to move in lockstep with the US Federal Reserve.

More from the report:

Gross domestic product is seen rising 2.4 per cent this year and 3.8 per cent in 2022, while oil growth is expected to contract 1 per cent in 2021.
The UAE’s economy is set to benefit next year from neighbour Qatar hosting the World Cup, and from the World Expo in Dubai
Dubai’s hotel occupancy rate during the first quarter was at 64 per cent compared with 69 per cent a year earlier