Frankfurt: The inflation rate in the UAE may turn negative in the second half of the year, pulled down by housing and food prices, according to Deutsche Bank AG.
"Headline inflation has declined sharply year-to-date and looks set to slip into negative territory," Caroline Grady, a London-based economist for the bank, wrote in a note to clients yesterday. "Our expectation of further declines in real estate prices would drag the housing component lower and a widening output gap will keep price pressures subdued more generally."
Inflation in the Arab world''s second-largest economy will likely slow to an average of 1.5 per cent for the full year, compared with a 10 per cent advance in 2008, according to the Deutsche forecast.
Inflation across the GCC has been easing after reaching records in five of the six member states as commodity prices plummeted.
Oil prices have more than halved from their high of $147.27 a barrel in July last year.
Residential property prices in Dubai are down 50 per cent after hitting a peak last October, the bank said.