March 25, 2018 / 12:09 PM / a year ago

UPDATE 1-UAE inflation eases in February after jumping on new tax

(Adds details of prices for individual categories, analysis)

DUBAI, March 25 (Reuters) - Inflation in the United Arab Emirates eased slightly in February after jumping to a multi-year high in January when the government introduced a 5 percent value-added tax, official data showed on Sunday.

The annual inflation rate came down to 4.5 percent last month from 4.8 percent in January, which was the highest level since 2015. Month-on-month, consumer prices fell 0.2 percent in February after surging 2.7 percent in January.

There were signs in February that some companies were discounting to maintain market share after initially hiking prices more sharply in response to the tax.

Food and soft drink prices rose 6.5 percent from a year earlier in February, slowing from a jump of 7.2 percent in January, and dropped 0.9 percent from the previous month. Clothing and transport inflation also moderated.

A weak real estate market in the UAE, which is pushing down residential rents in Abu Dhabi and Dubai, also restrained inflation in February. Housing and utility prices fell 0.6 percent from a year earlier, after a 0.5 percent decline in January. (Reporting by Andrew Torchia Editing by Jane Merriman/Mark Heinrich)

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