UAE becomes more affordable as stimulus cuts cost of living

The UAE has become more affordable in 2021 due to consistent decline in rent, property prices and cost of education, transportation and dining out, among others.

The UAE dropped from 32nd place in 2020 to 37th this year in the Cost of Living Index 2021 released by global data service provider Numbeo.

The rental index score fell from 41.07 points in 2020 to 40.62 points this year while restaurant index dropped from 61.32 points to 61.25 points. But cost of groceries rose from 47.63 points to 48.84 points due to the impact of lockdown on imports and trade during the second quarter of 2020.

Anurag Chaturvedi, CEO of Chartered House, attributed decline in the cost of living to the impact of stimulus boost provided by the UAE government to Covid-19-hit economy through various relief packages.

“The core reason behind this is the decline in inflation through second quarter 2020 till end of 2020. With weak domestic price pressures because of the restrictions placed on the economy since the end of March have also had an impact on inflation, which fell for nine months in a row,” he said.

“Furthermore, during the last 10 months, consumers were only able to buy online, where prices of commodities, essentials and clothing and household dropped as retailers sought to shift stocks of unsold merchandise. Modest increase in food and drink prices provided the only significant upward effect on inflation last year,” added Charurvedi.

He said residents were relatively less burdened due to online education where they saved on transport and discounts on fee. Also, most of people saved on deferring optional medical treatment because of Covid-19.

Ambareen Musa, founder and CEO of Souqalmal.com, said looking at the latest Consumer Price Index (CPI) statistics in the UAE, retail inflation declined 3.8 per cent during the 2020.

“The housing and utilities category, which constitutes the highest relative weightage of 43 per cent in the CPI, dropped by 7.9 per cent during this one-year period, declining steadily month-on-month. This fall has been the result of rents witnessing a downward trend across the residential property market in the country.”