Inflation in the United Arab Emirates surged to a record 14 per cent last year, spurred by rent, food and fuel prices, a report said.

Higher fuel prices boosted construction costs and helped encourage landlords to raise rents, the Emirates Business report said citing Abu Dhabi Chamber of Commerce

Inflation in 2006 was 9.5 percent and less than 4 percent the year before, it said.

"Although the surge in rents was a major contribution to inflation in the UAE, the fuel price increases should not be ignored as they play a key part in pushing up rents to such an alarming level given their direct impact on various economic sectors, including construction and transport," the Chamber of Commerce said, according to the newspaper.

Lower profit margins for contractors could affect their ability to service loans, the newspaper said.

An official in the research department at the Chamber of Commerce, when contacted by Reuters, said she was not immediately aware of the report.

Gulf states, most of which peg their currencies to the dollar, are struggling to control inflation, fuelled by a more than six-fold increase in oil prices during the last six years and lower interest rates that have spurred economic growth. - Reuters