The UAE has historically maintained relatively low inflation, typically ranging between 1-3% annually. The USD peg plays a significant role in anchoring inflation expectations, as it effectively imports US monetary policy. The UAE government also subsidizes key goods and services, including fuel, electricity, and water for nationals, which helps moderate living costs. However, housing and rental costs — particularly in Dubai and Abu Dhabi — can experience significant volatility and are often the largest driver of CPI movements in the country.