The UAE, the last of the six Gulf Arab oil producers to release inflation data for 2007, said it planned to modify its consumer price index to reflect price trends more accurately and release data monthly beginning next year.
Inflation has been soaring across the Gulf Arab region, where most states peg their currencies to the ailing dollar, driving up import costs and forcing them to track seven US interest rate cuts since last September.
But rising rents in the UAE, the world’s fifth-largest oil exporter and the second largest Arab economy, led the rise in 2007 inflation to 11.1 percent from 9.3 percent a year earlier, the Ministry of Economy said in a statement.
"The figure is a significant pick up on the 2006 level and is marginally higher than we had estimated," said Simon Williams, regional economist at HSBC.
"I expect the 2008 figure to be higher still, driven in part by rising food costs and dollar-driven dirham weakness, but primarily by further rapid growth in domestic demand," he said.
The real estate sector is booming in the UAE, particularly in the emirate of Dubai where foreigners have been able to invest in property since 2002 and low interest rates make holding properties more attractive.
Costs of rent and related household items, which account for 36 percent of the consumer price index, rose 17.5 percent last year, the ministry said.
The "other goods and services" category rose 16.8 percent, the ministry added, without giving a breakdown of how steeply food prices rose.
Inflation in the UAE will probably accelerate to 11.8 percent this year, a Reuters poll showed last month. The poll had predicted a 2007 inflation rate of 11.1 percent.
