A latest report by the Dubai government has put forward the possibility of the return of inflationary pressures in the UAE by the turn of next year. The Dubai Chamber specified that the signs that economy has commenced to pick up indicate a short-lived time-span for low UAE inflation rate that averaged three per cent in the first seven months of this year. 

The report says that if this happens then the foremost concern for the UAE Central Bank will be to revert, if inflationary pressures resurface.

It has appeared that the interest rates are likely to be kept very low by the US Federal Reserve till the time its economy recovers and prices start rising again.

The report informed, "Given the strength of the UAE economy, which has until now withstood the force of the global downturn much better relative to the US, the UAE might need to adopt a higher monetary policy stance as inflationary pressures might start to appear as early as the turn of 2010." 

The report, which was compiled on the Ministry of Economy figures, suggested a rise in consumer prices in July - the first this year. The report said that UAE Consumer Index stood at 114.16 in the first seven months, compared with 110.87 in the same period last year.

The main factors behind the monthly rise were the housing-related consumer prices, accounting for the largest share of the CPI weight. 

"Property rents and house prices have increased slightly due to the easing credit availability on top of an overall marked improvement in individuals' appetite to invest. This has spurred conclusions that the property market has indeed bottomed out in June," specified the report.