UAE residents brace for higher cost of living, cutting back on household expenses

As inflation bites into household budgets across the globe, UAE residents also feel the pinch of rising costs and may continue making cutbacks on their spending in the future, according to findings of a research.

The latest YouGov Realtime study, which explores how inflation has affected people's cost of living in the UAE as well as the areas where they have made cutbacks to their household spending along with their future spending intent, says residents are likely to make greatest reductions on eating out and buying gadgets and electronics.

Data collected online among 1,006 urban respondents in the UAE for the study shows that a majority (83 per cent) of residents believe their cost of living has gone up to some extent as compared to 12 months ago, with more than half (53 per cent) saying it has gone up a lot and for 30 per cent it has gone up a little.

In the first quarter of this year, the UAE's inflation increased 3.35 per cent amid higher prices in 11 main sectors, according to the latest data by the Federal Competitiveness and Statistics Centre (FCSC).The country's Consumer Price Index (CPI) jumped to 102.70 points in Q1-22, compared to 99.37 points in the year-ago period.

The prices of transportation, restaurants and hotels, food and soft drinks, and tobacco rose by 22 per cent, 6.87 per cent, 5.4 per cent, and 4.07 per cent, respectively.

“The main driver of inflation in Dubai in recent months has been transport costs, which were up 28.8 percent year-on-year in April, accounting for around half of headline inflation. Food prices (8.6 percent higher year-on-year) were the second biggest driver of inflation in April, followed by recreation and culture costs and restaurant and hotel prices,” says Khatija Haque, head of Research and Chief Economist at Emirates NBD.

According to the YouGov study, despite the rising costs, two in five (39 per cent) are hopeful and expect their household’s financial situation to become better in the future. Compared to this, fewer one in five anticipates their financial situations to worsen (21 per cent), and just under three in ten expect it to remain unchanged (27 per cent). Young adults between 25-34 years are most hopeful about their household’s financial condition improving in the future (44 per cent), whereas older adults aged 45+ were least likely to show this optimism (31 per cent).

ALSO READ:

• UAE: 9 tips to save on groceries as food costs increase

• Buying cheaper options, shopping online; how UAE residents are cutting costs as food prices rise

—issacjohn@khaleejtimes.com