Dubai’s business conditions expanded at the fastest rate in three months last month, fueled partly by travel, tourism, and the construction industry.

According to a poll issued the previous month by S&P Global, the Middle East’s economic hub had an intense speed of expansion in its non-oil economy in June. Its Dubai Purchasing Managers’ Index increased to 56.1 from 55.7 in May, the highest since June 2019 and far above the 50-point threshold that distinguishes expansion from contraction.

“The Dubai PMI continued to trend upwards in June, reflecting further strength in new business and activity,” said the S&P Global economist David Owen. However, the economy also confronted the issue of rising inflationary pressures, resulting in the fastest increase in input costs since the beginning of 2018.

Dubai’s business environment has improved the most since June 2019.

Although less intense than in other parts of the world, cost pressures are increasing in the oil-rich Gulf region, prompting countries which include Saudi Arabia and the United Arab Emirates, of which Dubai is a core component, to set aside billions of dollars to assist low-income citizens and stockpile critical commodities.

The steep increase in global energy prices weighed heavily on firms, and consumers will feel the squeeze as petrol prices rise. If cost inflation remains strong in the second half of 2022, enterprises will find it increasingly difficult to keep pricing rises in check.

According to the most recent figures from the city’s statistics bureau, consumer price inflation in Dubai jumped to 4.7 percent in May, which is the highest level since at least 2016, despite enterprises continuing to bear the burden of rising prices to compete in a crowded market.