Prices of petrol have been increased by 14 fils a litre.
In line with the rising prices in international markets, the UAE on Monday increased petrol prices for the month of June, reaching its highest level since the UAE announced deregulations in 2015.
Analysts believe that the increase in fuel prices will result in hike in inflation, but falling rentals and some corporates absorbing recently-introduced VAT will help absorb some impact of the inflation.
The price of 98 Unleaded petrol (Super) has been increased from Dh2.49 per litre in May to Dh2.63 in June, an increase of 14 fils or 5.6 per cent, while prices of 95 Unleaded (Special) has been raised by 14 fils, or 5.9 per cent, from Dh2.37 to Dh2.51. And the price of 91 Unleaded (E-Plus) will also rise by 14 fils from Dh2.30 in May to Dh2.44 in June.
The diesel price for the month of June has been set at Dh2.71 for the next month as compared to Dh2.56 for this month.
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Monica Malik, chief economist, Abu Dhabi Commercial Bank, said the rise in fuel prices in June will put an additional pressure on consumers along with the introduction value-added tax which was levied in January 2018.
"We have seen some drop in inflation in March but it start rising again in April. But significant rise in fuel price in will result in acceleration in inflation as a result of that in May and June. The positive development is the discussion between Opec group to increase production and that could be a good sign," Malik said.
She pointed out that reducing rentals and some corporates absorbing the VAT are also helping the consumers against the rising fuel prices and inflation.
Brent and WTI were trading at $75.4 and $66.88 per barrel, respectively, at 4.50pm UAE time on Monday. Both had lost nearly one per cent after Saudi Arabia and Russia announced on Friday that they were discussing the possibility of raising oil production by some one million barrels a day. In addition, the uptick in US crude production, prompted steep declines in crude futures last week.
According to Bank of America Merrill Lynch analysts, oil prices in the UAE will peak in mid-2019.
The analysts expect Brent crude oil prices to trend gradually higher, hitting an average of $80 per barrel by mid-2019 before gradually trending lower to an average of $71 a barrel by end-2019. This amounts to approximately a $20 appreciation in crude oil from the end of last year to the peak in the outlook.
By Waheed Abbas
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