Tuesday, January 11, 2011

CPI Retreats 0.79% in December 2010; Statistics Abu Dhabi: 2010 Inflation Rate Around 3%


Statistics Center - Abu Dhabi issued today its monthly report on the consumer price index (CPI) for the month of December 2010, which analyzes the CPI calculations for the month under review with the year 2007 fixed as the base year, the report also details CPI results by welfare levels and types of households.


According to this report, the annual rate of inflation (in consumer prices) in the Emirate of Abu Dhabi for the year 2010 stood at 3.06%, compared with 2009, as shown by the rise in the rise in the CPI to 119.33 points in 2010, up from 115.79 points in 2009.

This rate reflects the net change in the prices of goods and services of the consumer basket during the months of last year, compared to the preceding 12 months (i.e. the year 2009). The report reveals that the CPI edged down 0.79% from 121.88 points in November 2010 to 120.91 points in December 2010.


As SCAD’s report points out, this level annual inflation (3.06%) proves that Abu Dhabi's economy is strong, stable and enjoys a significant competitive advantage vis-à-vis regional and global economies. This would enhance the appeal of the emirate’s economy to both domestic and foreign investment, since the inflation rate and levels of prices represent some of the important economic criteria invoked to assess the investment climate and risks in any country.

The report shows that the 3.06% rise in consumer prices during 2010 compared with 2009, has led to an increase of 2.96% in consumer prices for households of the bottom welfare quintile during this period, compared with 2009. The corresponding rise for other welfare levels was 2.75% for households of the top quintile and 3.27% for the upper middle welfare quintile.

An analysis of the overall rise (3.06%) in terms of its impact by type of household for the same periods of comparison shows that consumer prices have risen by 2.75% for national households, compared to 3.52% for non-national households and 2.66% for collective households.

SCAD’s report explains that rises in the CPI do not necessarily correspond to higher prices for all the goods and services that make up the consumer basket, nor do they mean that all goods and services have increased by the same percentage (3.06% in this case); for there are goods and services whose prices have risen at rates above the overall rate (3.06%) and others whose rate of increase was below this general average. There are also goods and services whose prices have fallen. However, the net change or the combined outcome of these changes (upward and downward movements) in the prices of the consumer basket during the  months of 2010 compared with 2009 produced an average increase in prices by 3.06%.
 Weights, relative changes and percentage contribution of major groups to the overall change in consumer prices in 2010 compared with 2009.   
Main Expenditure Groups
Weight (100.0)
Relative Change %
Contribution %
Food and non-alcoholic beverages
16.1
6.9
36.8
Alcoholic beverages and tobacco
0.3
2.9
0.2
Clothing and Footwear
9.8
-8.3
-28.0
Housing, water, electricity, gas and other fuels
37.9
4.4
55.4
Furnishings, household equipment and routine household maintenance
4.8
3.8
5.7
Health
0.8
0.8
0.2
Transport
9.7
6.5
19.2
Communication
7.7
-3.8
-8.3
Recreation and culture
2.4
1.3
0.9
Education
2.6
14.2
13.7
Restaurants and hotels
3.4
1.3
1.5
Miscellaneous goods and services
4.6
1.7
2.6


The report which sets out the major twelve expenditure groups, as per the international classification, i.e. "Classification of Individual Consumption according to Purpose (COICOP), shows that the "housing, water, electricity, gas and other fuels" group remained the largest contributor to the overall y-o-y increase in prices during 2010, having accounted for 55.4% of that increase. This contribution resulted from a surge of 4.4% in the prices of this group and due the group’s sizable weight, which constitutes 37.9% of the total weight of all expenditure groups.

The next highest contributor to the overall year-over-year increase in the CPI in 2010 compared to 2009 was the "Food and non-alcoholic beverages group", which accounted for 36.8% of the rise in the index during the aforesaid period due to increases in the prices of most of the component subgroups of this main group.

The “transport” group contributed 19.2% to the year-over year rise in consumer prices for the periods compared as a result of an overall increase of 6.5% in its component subgroups, namely, the “transport services” subgroup which advanced 1.7%, due mainly to a rise of 9.9% in the cost of air transportation. In addition, the cost of “operation of personal transport equipment” grew by 8.1%, reflecting an increase in the prices of “fuel and lubricants of personal transport equipment” by 13.6% and a rise of 1.8% in the prices of “spare parts and accessories of personal transport equipment”.

The “Education” group accounted for 13.7% of the overall increase that occurred during the year 2010 compared with 2009, reflecting a surge of 14.5% in “tuition fees”.

On the hand, one of the main groups that slowed down consumer prices during 2010 compared to 2009 was the "clothing and footwear" group, which detracted 28% from the overall rise in consumer prices for the period under review, during which the prices of this group retreated by 8.3% as a result of a drop in the prices of the “clothing” and “footwear” subgroups by 6.9% and 22.7%, respectively.


Moreover, the “communications” group detracted 8.3% from the overall y-o-y increase in consumer prices during 2010, owing to a drop in the prices of “postal/mail services”, “telephone and telefax equipment” and the “telephone and telefax services” by 3.9%, 15.7% and 3.7%, respectively.

According to SCAD’s report, a 0.79% month-to-month drop was recorded in consumer prices for December 2010 compared to November 2010, as the CPI retreated from 121.88 points in November 2010 to 120.91 points in December 2010, reflecting the net change in consumer basket prices over the two months compared, following 4 successive monthly rises in the index.

Inflation Rates for the Months of 2009 and 2010
One of the key expenditure groups that showed an observable decline during the month of December 2010 compared to November 2010 was the "food and non-alcoholic beverages" group, which went down 1.9%, due to the drop in the prices of a number of subgroups falling under this group, including "fish and seafood", whose prices have decreased by 8.1%, the "meat" subgroup, which retreated by 5.3% and the "Fruits" subgroup, which edged down 1.8% and the "Vegetables” subgroup, which declined by 2.4%.

SCAD’s report also elaborated on the impact of the CPI movement on different welfare levels, the report finds that the rise in consumer prices during 2010 by 3.06% above the price levels for the year 2009 resulted in a surge of 2.96% in consumer prices for households of the bottom welfare quintile for the same period of comparison. The corresponding rise for other welfare levels was 2.75% for households of the top quintile, 3.27% for the upper middle quintile and 3.46% for the lower middle quintile, which suffered by the largest increase among the five welfare levels.

The report also details the impact on different welfare levels produced by the 0.79% drop in consumer prices during the month of December 2010 compared to November 2010 which brought about a decrease of 0.5% in consumer prices for the bottom quintile, but affected the lower middle, the middle and upper middle welfare quintiles by drops of 0.67%, 0.65% and 0.87% in consumer prices for the said welfare levels, respectively, while the corresponding decline for the top quintile was 0.88%.

Detailed by its impact according to household type, the overall 3.06% year-over-year rise in consumer prices for the months of 2010 pushed up consumer prices for national households by 2.7%, compared to 3.5% for non-national households and 2.7% for collective households.

Finally, a break down by household type of the 0.79% fall in consumer prices during the month of December 2010 compared to November 2010 reveals an decline of 0.98% in consumer prices for the national households segment, while the corresponding decline for non-national and collective households was 0.64% and 0.47%, respectively.

In conclusion, the report points out that the inflation rate in the Emirate of Abu Dhabi for 2010 evidently reflects relative stability in the domestic market, suggesting that inflation would continue to stabilize around  minimum levels over the long term, expanding opportunities for further growth and financial and economic stability in the emirate .



SCAD’s CPI report in conformity with the highest technical standards:

In preparing its CPI reports, Statistics Centre - Abu Dhabi follows the methodologies adopted internationally in this field, using a broad and highly representative basket of goods and service, to ensure accuracy in the calculation of the index, which is the sole officially authorized source for monitoring changes in prices and inflation in the Emirate of Abu Dhabi.




SCAD’s Price Indices Section has recently developed the computing of the CPI so that it is compiled according to households’ types and levels of welfare. As for the welfare level approach, the population is divided into five segments (quintiles) representing five levels of welfare, based on average per capita annual expenditure. Each quintile reflects the consumption pattern represented by that quintile. In regard to the household type approach, the population is divided into three types of households as set out in the results of the Household Income and Expenditure Survey (2007-2008), namely, national, non-national and collective households.

To represent all regions of the Emirate, the selected sample of items included in the Consumer Price Index basket uses actual data from the 2007 household income and expenditure survey. The sample of outlets were selected in such a way as to represent points of purchase for a large base of consumers all over the Emirate of Abu Dhabi, taking into account the geographical distribution of sources within the emirate.















SCAD 2010 logo H resize

About Statistical Center-Abu Dhabi (SCAD)
Statistics center-Abu Dhabi (SCAD) was established in 2008 in accordance with Law No. (7), to develop and organize statistical work in the Emirate of Abu Dhabi in particular and the United Arab Emirates in general. SCAD’s purpose is to produce statistical information that is consistent with the emirate’s orientation towards sustainable development and strategic plans under the supervision and with full support of the Executive Council of the Emirate of Abu Dhabi.


Being the of the official statistical data collection agency in the Emirate of Abu Dhabi, the center assumes the functions of preparing the statistical plans and programs that serve the emirate’s wider development programs, conducting statistical surveys across the emirate. SCAD is also responsible for the collection, classification, storage, analysis and dissemination of official statistics and the release of the results of social, demographic, economic, environmental and cultural surveys.


The activities of the Center will encompass all areas relating to social conditions in accordance with relevant international standards and ethics, such as independence, professionalism, impartiality, objectivity, confidentiality, cost effectiveness and quality of statistics.

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