Dubai's inflation in the month of July witnessed a record drop of nearly two per cent compared to the same month last year, the Dubai Statistics Centre said on Sunday.

The consumer price index, or CPI, dropped by 1.9 per cent in July over last year, mainly on a sharp fall in the index heavyweight; the housing, water, electricity and gas group, which contributes around 44 per cent of the total index, fell by 5.39 per cent in July compared the same month in 2011. The clothing and footwear group also witnessed a decline, shedding 3.47 per cent last month over July 2011.

On the other hand, the education and food and non-alcoholic beverages groups increased by almost two per cent.

On a month-to-month basis, Dubai inflation recorded a slight drop of 0.15 per cent in July compared to June. The food and non-alcoholic beverages group declined by 0.21 per cent in July against the previous month due to lower prices of vegetables.

At the beginning of the holy month of Ramadan, the government issued strict instructions to control the prices of essential commodities across all supermarkets and hypermarkets.

The Ministry of Economy has issued instructions to retailers for maintaining the prices of a basket of essential food and consumer items during Ramadan. These prices would remain firm through the end of 2012, according to the ministry.

Among all the 12 groups under the CPI, only three increased marginally, three dropped and six remained unchanged.

Stability was observed in housing, water, electricity, gas and fuel group, despite the low rents paid by tenants, by 0.01 per cent, and higher prices for liquid fuels increased by 4.11 per cent; the prices of materials and services and maintenance of the dwelling by 0.71 per cent.

Inflation rose in a range of furniture, furnishings and household items and repair rate by 0.02 per cent, due to higher prices of small electrical home appliances that increased by 4.26 per cent, followed by the prices of basic household applicances, up 0.16 per cent. Inflation rose in the communications group by 0.01 per cent, due to higher prices of services of telecommunications rate of 0.90 per cent.