Inflation has gradually infiltrated into the household budgets of people across the world, and residents from UAE are also bearing the brunt of rising costs. They are adjusting to rising expenses by making cutbacks in their spending patterns for the future. Research in the region has revealed that residents in the United Arab Emirates are now refraining from eating out and buying electronic gadgets due to the surging costs because of inflation.
Kavan Choksi speaks on the rising costs of the standard of living in the UAE
Business and finance expert, Kavan Choksi, says current research data in the region has revealed some key insights on the impact of inflation on the standard of living. Online data suggests that 83% of residents in the area agree that the costs of living have increased compared to a year ago, with over half of them saying household expenses have grown a lot (53%) and 30% agreeing that these costs have surged a little. Approximately 1,000 urban residents were interviewed for the above study and research data.
Increase in inflation in the UAE, and how are its residents welcoming this change?
In the first three months of 2022, the inflation rate in the region surged 3.35% amid high prices in 11 major sectors, as per data reports by credible sources. The Consumer Price Index in the area jumped to about 102.70 points in the first quarter of 2022, compared to 99.37 points in the same period one year ago.
The rise in costs – significant sectors in the economy have been affected
The prices of restaurants and hotels, food and aerated drinks, transportation, and tobacco rose by approximately 6.87%, 5.4%, 22%, and 4.07%, respectively.
What are the main drivers of inflation in the UAE?
The prime driver of inflation in the past few months in Dubai has been the costs of transportation, which went up to 28.8% year-on-year in the month of April and comprised more than 50% of inflation headlines. The next industry that followed suit was the food sector, then the culture, recreation, restaurant, and hotel costs in the region.
The reaction of people towards inflation and household costs
As per government surveys in the UAE, despite these increases in costs, there are two in five or almost 39% of the residents are optimistic and expect their financial situation at home will improve in the future. In comparison to the above figure, there are about one in five people (around 21%) anticipate their financial situation will become worse in the future. On the other hand, there are below three in ten people that expect their financial condition will not change (approximately 27%).
According to business and finance expert Kavan Choksi, a further survey reveals that young adults who are in the age group of 25-34 years are optimistic that their financial condition at home will improve in the future. This data is estimated at 44%, whereas adults in the older age range, 45+ are least likely to display these same levels of optimism in the future. This figure has been estimated at 31% in the region.
