Comment by Nagham Hassan, Market Analyst at etoro
Abu Dhabi, United Arab Emirates – August , 2026: Every time Gulf tension flares, oil jumps and attention turns to pump prices. But for most households here, the number that shapes the monthly budget isn’t petrol. It’s rent, and residents have felt that for years. The Central Bank of the UAE’s June 2026 Quarterly Economic Review confirms it: housing does most of the work in the inflation figures. Abu Dhabi inflation ran at just 1.4% over the year to early 2026, but housing was up 4.7%. Dubai told an even more extreme story, with housing up 7.4%, though the release of official data lags a few months, so these readings run into the recent tension rather than its peak. The good news, which we’ll come to later, is that this squeeze is finally starting to ease.
According to Nagham Hassan, Market Analyst at etoro, despite that, it’s still crude that grabs the headlines as it’s been on a rollercoaster lately. Brent climbed about 25% in July as hostilities flared and disruptions spread from the Strait of Hormuz to the Red Sea, dipped below $84 at the start of August on hopes of peace talks. UAE fuel prices track crude with a monthly delay, which is why August pump rates rose across the board, with Special 95 up 6.08% to AED 3.49 a litre, per the Fuel Price Committee, after July’s first relief in five months.
The pump moves first and loudest, but it’s a smaller slice of the budget than rent and other expenses like food and household goods, which also absorb higher fuel through freight and shipping. Food and beverage prices rose about 4% over the year in Dubai and 1.5% in Abu Dhabi, per the same central bank review, with imported items hit hardest. Around the world, prices have eased, but they haven’t come back down to pre-war levels: the UN’s global food price index sat about 1.7% above a year earlier in June, and retailers say stable prices will take months to arrive. The silver lining is that the UAE central bank expects prices to stay “well below global averages,” helped by its regulation of staple foods like rice, flour and cooking oil, but still raised its 2026 inflation forecast from 1.8% to 2.3%, so consumers aren’t going to see cheaper prices anytime soon.
One area where locals are getting some relief, fortunately, is housing prices, which takes up a large chunk of budgets. For years, people arrived in the UAE faster than new homes could be built, and prices climbed to match, rising sharply across both cities. However, real estate firms are now reporting an influx of supply, taking pressure off housing costs. In Dubai, REIDIN’s index shows rents down 2.16% month-on-month in June and 2.55% year-on-year, with Cavendish Maxwell counting about 24,800 homes completed in the first half, the strongest in years as earlier projects reached handover. Abu Dhabi is a step behind, with rents down 1.79% month-on-month but still 3.61% higher year-on-year, but all rental increases have been temporarily suspended in the emirate since June.
New leases are already getting cheaper, but most current tenants may not feel the relief until they renew their annual contracts and find themselves being able to renegotiate for a lower rate. This is why the central bank’s figures still showed housing costs rising into early 2026, even as the market itself was starting to shift. The bank itself now points to easing housing costs as one reason it expects inflation to stay contained this year.
So, the cost that squeezed households most is finally turning, but slowly and unevenly. If you’re signing a new lease, the market has moved in your favour, and the next few months look like a good window to renegotiate. Fuel will keep swinging on Gulf tensions that nobody can predict, and it may dominate headlines, but ultimately it is a smaller share of your monthly budget. One caveat: some of this cooling reflects a softer economy, not just more supply, so it’s relief with a footnote.
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