Inflation is affecting households across the globe, and residents in the UAE are also feeling the pinch of these increasing costs. They are struggling to make cutbacks in their spending habits for the future, according to recent research and survey in the region.
Kavan Choksi– Transportation costs are the primary driver of inflation in the UAE
According to business and finance expert Kavan Choksi, the primary trigger of rising inflation has been transportation costs in the region. These costs have gone up by 28% in April year-on-year, accounting for 50% of the headline inflation.
Cutting down on spending habits
The latest study released by YouGov explores how inflation has negatively affected the cost of living of people residing in the UAE and the areas where they had to cut down on household spending. This act has also affected their intent for expenditures in the near future as well. Most residents in the UAE are going to make a lot of reductions on buying gadgets, electronics, and eating at restaurants in the near future.
The cost of living has risen for most residents in the UAE
Online data collected from 1,006 respondents in urban areas have revealed that 83% of the residents believe that the cost of living for their households has risen compared to a year back, while there are more than half of this number, around 53%, agree that these costs of living have grown a lot in the region, while 30% of the region’s residents believe that prices have surged a little.
Inflation in the first quarter of 2022
In the first three months of this year, the inflation in UAE has risen by 3.35% amid high prices in eleven significant sectors, as per the latest reports issued by the Federal Competitiveness and Statistics Center (FCSC). The Consumer Price Index (CPI) of the country surged to 102.70 points in the first quarter of 2022, compared to 99.37 points in the past.
The costs of transportation, food, aerated drinks, restaurants, hotels, and tobacco have risen in the region. The prices of food were the next most significant driver of rising costs and inflation in April, followed by culture and recreation prices and restaurant and hotel prices as well.
What does the research say, and how do the residents in the region feel about rising costs?
As per the YouGov reports, despite these increasing prices, there are two in five people (approximately 39%) are positive, and they expect their household’s financial situation to become improved in the near future. In comparison to the above figure, there are just below one in five people (approximately 21%), and just three people among ten expect their household finances to remain unchanged (27%).
According to Kavan Choksi, the reaction among young adults is different as those between the ages of 25 to 34 years are positive about the economy. These young adults are hopeful that their financial condition at home will improve in the future (44%), whereas older adults who are over 45 years were least to show these levels of optimism for their financial condition at home (31%).