UAE inflation: how prices are measured and the latest rate

UAE consumer price inflation averaged 1.3% in 2025, after 1.7% in 2024 and 1.6% in 2023, according to data from the Federal Competitiveness and Statistics Centre (FCSC). Prices rose faster in 2026: Dubai’s index was 5.3% higher in the second quarter than a year earlier, led by transport, food and housing, and the Central Bank of the UAE forecasts 2.4% for 2026.

Key takeaways

• UAE consumer price inflation averaged 1.6% in 2023, 1.7% in 2024 and 1.3% in 2025 (FCSC).
• Dubai's CPI rose 5.3% year on year in Q2 2026, with transport up 15.1% and housing up 7.3%.
• Housing, water, electricity and gas make up 37.6% of Dubai's consumer basket, the largest weight.
• Abu Dhabi's inflation was 0.3% in 2025, against 2.8% in Dubai.
• The CBUAE forecasts UAE inflation of 2.4% in 2026 and 1.9% in 2027.

On this page 9 sections

The latest UAE inflation rate

The latest full-year rate for the UAE is 1.3%, the average for 2025. For 2026, the most recent official figure checked for this guide is Dubai’s: its consumer price index (CPI) in the second quarter was 5.3% above the same quarter of 2025. For the UAE as a whole, the Central Bank of the UAE (CBUAE) forecasts 2.4% for 2026.

UAE consumer price inflation, annual average

2023: 1.6%; 2024: 1.7%; 2025: 1.3%

UAE headline consumer price inflation averaged 1.6% in 2023, 1.7% in 2024 and 1.3% in 2025 (FCSC data); in 2025 Abu Dhabi averaged 0.3% and Dubai 2.8%.

The UAE numbers are compiled by the FCSC, the federal statistics body, and the CBUAE reproduces them in its reports. Abu Dhabi and Dubai also measure prices in their own emirates, and their rates can differ widely from the national one.

Dubai consumer price inflation, Q2 2026

5.3% (Q2 2026); housing weight 37.6%

Dubai's headline consumer price inflation reached 5.3% year on year in Q2 2026, up from 3.3% in Q1 2026, according to the Data Dubai Platform; housing, water, electricity and gas (37.6% of the basket) rose 7.3%, transportation (11.7%) 15.1%, food and beverages (9.6%) 7.3% and education (8.0%) 2.3%.

Inflation in recent years

UAE inflation stayed below 2% a year from 2023 to 2025, and Abu Dhabi’s was lower than the national rate in each of those years. The table brings together the official annual figures checked for this guide; earlier years were not checked against an official source, so the series starts in 2022.

UAE figures are FCSC annual averages as published by the CBUAE; Abu Dhabi figures are from the Statistics Centre - Abu Dhabi (SCAD); Dubai’s 2025 average is from the CBUAE’s Financial Stability Report 2025.

Abu Dhabi consumer price inflation, annual

2022: 5.6%; 2023: 0%; 2024: 0.5%; 2025: 0.3%

Abu Dhabi's consumer price index rose 5.6% in 2022, 0% in 2023, 0.5% in 2024 and 0.3% in 2025; housing, water, electricity, gas and other fuels rose 2.6% in 2025 and food and beverages 0.1%.

In Abu Dhabi, 2022 saw sharp rises in transport and food prices, according to SCAD, before the rate dropped to zero in 2023.

How inflation is measured

Inflation is the percentage change in a consumer price index, which prices a fixed basket of goods and services that households buy and weights each item by its share of household spending. When people quote “the inflation rate”, they usually mean the change in this index over twelve months.

The consumer price index

A CPI is an index number, not a price: it equals 100 in a chosen base year, and a reading of 104.5 means the basket costs 4.5% more than it did then. Abu Dhabi’s method, published by SCAD, shows how an emirate builds one.

How Abu Dhabi's CPI is built

Base year 2021; weights from 2019 survey; 13 groups

Abu Dhabi's CPI measures price changes of a fixed basket of goods and services bought by households in the emirate, classified into 13 COICOP groups; the base year is 2021 (index = 100), the weights come from SCAD's 2019 Household Income and Expenditure Survey, prices are collected monthly from around 150 main sources, and the index uses the Jevons formula at the elementary level and a Laspeyres-type formula above it.

In plain words, the two formulas work in two steps. First, the prices of one item, such as rice, collected at several shops are averaged as a geometric mean (the Jevons formula), which SCAD says reduces the upward bias that a simple arithmetic average introduces. Second, the item indices are combined using the spending weights of the base period (a Laspeyres-type formula), so the basket stays fixed until the next survey updates it.

SCAD also points out that a CPI measures a fixed basket and should not be confused with a cost of living index. A household that spends a larger share on rent or school fees than the average basket can face a different rate. The UAE-wide index is published by the FCSC.

Worked example

How a weighted basket turns price changes into one inflation rate

The basket, the spending amounts and the price changes are an illustration, not official data.

1. A household’s monthly basket costs AED 10,000 in the base period: housing AED 4,000 (40%), food AED 2,500 (25%), transport AED 1,500 (15%) and everything else AED 2,000 (20%).
2. A year later, housing prices are 5% higher, food 4%, transport 10%, and everything else unchanged.
3. The same basket now costs AED 4,200 + AED 2,600 + AED 1,650 + AED 2,000 = AED 10,450.
4. The rise is AED 10,450 minus AED 10,000 = AED 450, and AED 450 ÷ AED 10,000 = 4.5%.
5. The weights give the same answer: (40% × 5%) + (25% × 4%) + (15% × 10%) + (20% × 0%) = 2.0 + 1.0 + 1.5 + 0 = 4.5 percentage points.

Inflation on this basket: 4.5%, and the index moves from 100 to 104.5.

What is in the basket

Housing is the largest item in both emirates’ baskets: just over a third of the basket in Abu Dhabi and a little more in Dubai. Transport and food follow, so changes in rents, utility bills, fuel and groceries move the headline rate most.

Weights are out of 100. Dubai’s are those published with its 2026 quarterly figures (Data Dubai Platform, in the CBUAE review); Abu Dhabi’s are SCAD’s weights for the 2021 base year, from its 2019 household survey. The group names differ slightly between the two: Abu Dhabi’s tobacco group includes alcoholic drinks, and its miscellaneous group includes personal care and social protection.

What pushed prices up in 2026

Transport and food drove the rise in Dubai, on top of housing costs that were already rising. Between the first and second quarters of 2026, transport inflation went from almost zero to double digits and food inflation more than doubled.

Rates are year on year. Source: Data Dubai Platform, in the CBUAE’s Quarterly Economic Review, September 2026.

The CBUAE’s explanations, group by group:

• Transport: higher fuel costs, supply chain disruptions and higher maintenance and insurance costs, broadly in line with global energy markets.
• Food and beverages: higher global food prices and elevated shipping and logistics costs, passed on to domestic food prices.
• Housing: still the main driver of inflation, with 37.6% of the basket, although its rate eased slightly, reflecting a slight moderation in residential rents and housing-related utility costs.

Some groups held the headline rate down: clothing and footwear prices fell slightly and information and communication prices were flat. Behind the cost pressures, the CBUAE’s Financial Stability Report 2025 describes a regional crisis in early 2026, including GCC airspace disruptions and the closure of the Strait of Hormuz, which it expected to raise food and transport costs. Its effect on output is covered in UAE GDP.

Forecasts

The CBUAE expects UAE inflation to rise to 2.4% in 2026 and ease to 1.9% in 2027. These are the central bank’s projections from its Quarterly Economic Review of September 2026, not measured outcomes, and this guide adds no forecast of its own.

CBUAE inflation forecast

2026: 2.4%; 2027: 1.9% (forecast)

The CBUAE forecasts UAE inflation at 2.4% in 2026 and 1.9% in 2027; it says the near-term outlook is shaped mainly by supply-side pressures from heightened regional uncertainty and their effect on global energy markets, shipping costs and food prices, and that housing costs, the regulation of selected staple food prices and the monitoring of key consumer prices support contained inflation.

Forecasts move with each review. The CBUAE’s earlier Financial Stability Report 2025 had projected 2.3% for 2026, before the September review raised it to 2.4%.

Is UAE inflation rising? The official figures published by October 2026 point upwards. Dubai’s annual rate averaged 2.8% in 2025, then reached 3.3% in the first quarter of 2026 and 5.3% in the second. For the UAE as a whole, the rate was 1.3% in 2025 and the CBUAE’s forecast for 2026 is 2.4%. For 2027, the CBUAE expects inflation to ease to 1.9% as global cost conditions ease.

Why UAE inflation has been low

The CBUAE names three things that support stable prices: contained housing costs, regulated prices for selected staple foods, and close monitoring of key consumer prices. It expects UAE inflation to stay below global averages in 2026 and 2027.

For 2025 specifically, the CBUAE says falling transport costs and easing food prices kept the average at 1.3%. SCAD’s annual data show the same pattern in Abu Dhabi, where transport prices fell in 2023, 2024 and 2025 while housing costs rose in 2025.

The exchange rate is the other part of the picture. Because of the dirham’s peg to the US dollar, the dirham rises and falls against other currencies together with the dollar, and the CBUAE’s Base Rate follows the US Federal Reserve’s Interest Rate on Reserve Balances, as explained in UAE interest rates. The CBUAE’s exchange rate data also reflect low inflation: in the year to June 2026, the dirham’s real effective exchange rate, which adjusts for inflation differences, fell partly because UAE inflation was lower than in its main trading partners.

Dirham effective exchange rates, June 2026

NEER +0.3%; REER -0.6% (June 2026, year on year)

The UAE's nominal effective exchange rate, which compares the dirham with a basket of trading partners' currencies, rose 0.3% year on year in June 2026, broadly mirroring the strengthening of the US dollar, while the real effective exchange rate, which adjusts for inflation differences, fell 0.6%, partly reflecting the UAE's lower inflation than its main trading partners.

What inflation means for businesses

For a business, inflation figures come into play where a contract, a budget or a pay review refers to a price index. SCAD notes that companies and governments often adjust payrolls and pensions in line with changes in the CPI.

A clause that links a price to inflation rests on three choices: which index (the UAE index from the FCSC, Abu Dhabi’s from SCAD or Dubai’s), which periods are compared, and whether the change is worked out from index levels or from a published rate. The headline rate is an average across the whole basket, so a business’s own costs can move very differently: in Dubai in the second quarter of 2026, transport rose 15.1% while clothing prices fell.

Worked example

A supply contract adjusted by a price index

The contract value and the index readings are an illustration, not official data.

1. A supply contract that runs for several years is worth AED 120,000 a year and says the annual price changes each year by the change in an agreed CPI.
2. The index reading named in the contract was 105.0 a year ago and is 107.1 now.
3. The change is 107.1 ÷ 105.0 = 1.02, an increase of 2.0%.
4. The new annual price is AED 120,000 × 1.02 = AED 122,400, an increase of AED 2,400.

Adjusted contract value: AED 122,400 a year.

Growth, interest rates and the currency are covered in the other UAE economy guides.