Annual inflation in Abu Dhabi jumped to 11.5% in March, up from 10.7% in December, driven by rent and food costs, a report by the emirate's Department of Planning and Economy said.

The first-quarter index for rents, electricity and water went up 18.21% on an annualized basis while the index for food, beverage and tobacco increased by 19.78%, the report added.

Because of the UAE’s dirham currency peg to the dollar, the country’s central bank usually follows US interest rate decisions, hampering the fight against inflation.

"There are inflationary waves that materialize through cyclical successive increases that fuel prices are currently experiencing. Diesel went up by 52% during the past four months," the report noted.

Al-Jazeera, Saudi Arabia, June 14, 2008