The forecast
Dubai's headline inflation is expected to peak at 5.4% in May before easing to 2.9% by December, according to analysts surveyed by The National — but only if the Strait of Hormuz reopens and global supply chains normalise in the second half of the year. Headline CPI printed at 4.8% year-on-year in April, up sharply from 3.8% in March and well above the pre-war baseline of 2.7%.
Where the pressure is coming from
- Transport: +9.2% month-on-month in April, following a 2.3% gain in March — the single largest driver of the recent acceleration.
- Food: +5.3% in March, moderating to 1.5% in April.
- Housing & utilities: surged 2.8% month-on-month in January before cooling to 0.3% in April, even as the annual housing-inflation print sits near 7.4%.
The macro frame
The Institute of International Finance now projects full-year UAE inflation at 2.8%, with the second half doing the heavy lifting on disinflation. RANE's senior MENA analyst Ryan Bohl described the current environment as "a period of adjustment rather than rapid decline." Emirates NBD's senior economist Jeanne Walters said firms are still passing input costs through to consumers via higher selling prices — a sign that pipeline pressure has not yet washed through. Garbis Iradian of the IIF expects gradual moderation through H2 2026.
The consumer reality
Redseer found that 78% of UAE consumers cited rising grocery prices among their top concerns, and 51% singled out food inflation specifically — a reminder that the headline trajectory and the household experience can diverge, especially when transport and housing weights run hot.
What it means for investors
If the projected disinflation path materialises, real yields in the UAE turn meaningfully more positive into year-end, which historically supports UAE-listed REITs and consumer-staples names with pricing power. The downside scenario — Hormuz remaining closed deeper into 2026 — keeps fuel and freight costs elevated, prolongs the squeeze on discretionary spend, and would likely push the central bank toward a more cautious stance on any move to follow the Fed lower.
What to watch
The May CPI release, due in mid-June, is the key near-term data point. Beyond that, watch shipping insurance premia on Hormuz routes, the EIA's monthly LNG flow data, and any UAE Ministry of Finance updates on subsidy and support measures, which will shape the H2 disinflation profile more than any single rate decision.
