Costlier by month: What are UAE households spending the most on?

Costlier by month: What are UAE households spending the most on?
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Published April 30th, 2015 - 15:27 GMT via

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Consumers in the UAE are paying significantly more out of their pockets for living essentials. (File photo)
Consumers in the UAE are paying significantly more out of their pockets for living essentials. (File photo)
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If you think your wallet is getting lighter every month, you probably need to review your spending.

The official figures from the National Bureau of Statistics released earlier this month have shown that consumers in the UAE are paying significantly more out of their pockets for living essentials.

The UAE’s consumer price index (CPI), a measure of price changes in goods and services, increased by 0.90 per cent in March 2015 from a month earlier. Compared to the same period last year, the CPI last month went up by 4.31 per cent.

An economist told Gulf News on Tuesday that the biggest driver of CPI, and the reason behind the increase in consumer expenditures, is the rising cost of housing, as well as utilities.

Analysts have been saying that rents will fall this year, but recent reports have shown that the cost of renting apartments in many areas around the UAE is still increasing. Rents for three-bedroom apartments in Dubai alone went up by 5.74 per cent in the past quarter.

In absolute terms, the cost of housing actually increased by 9.3 per cent year on year and up 2.33 per cent month on month, thus causing the CPI to rise significantly.

“The 0.9 per cent month-on-month [increase] actually is a bit too much,” said Alp Eke, director and senior economist at the National Bank of Abu Dhabi’s economic department.

“The CPI has increased since housing and utilities constitute nearly 40 per cent of household budgets. The increase in wages is not enough to keep pace and consumers are feeling the impact and paying significantly more out of their pockets,” Eke told Gulf News.

“In March 2015, the consumer price index increased by 4.32 per cent in comparison to March 2014, driven only by the cost of housing and utilities. In terms of relative contribution, in March 2015, housing and utilities contributed the most.”

However, it’s not just the cost of housing or electricity and water that is driving people’s household budgets today.

A closer look at last month’s CPI would show that consumers are also spending more on other living essentials, though the price changes are not too significant when compared to housing and utilities.

The cost of dining at restaurants and staying at hotels in the UAE is on the rise, with the CPI for this expenditure category registering a .49 per cent increase.

Getting around town, as well as commuting or driving to work, is not getting any cheaper either, with the CPI for transportation rising by 0.17 per cent.

Those who update their wardrobe or bring home new textiles on a regular basis will notice an increase in expenditures as well, with the CPI for textiles, clothing and footwear increasing by 0.14 per cent.

The occasional doctor’s or hospital visits are another contributing factor to rising expenditures, as the CPI for medical care increased by 0.11 per cent in March.

The CPI for furniture and household goods also went up by 0.08 per cent.

There are a few things that aren’t getting more expensive, however, and these include food and soda, registering a 0.13 per cent decline, beverages and tobacco (-0.12 per cent), recreation and culture (-0.01 per cent) and miscellaneous goods and services (-0.18 per cent).

Major expenditure groups and their CPI for March 2015:

(Items with rising costs)

Housing: 2.33%

Restaurants and hotels: 0.49%

Transportation: 0.17%

Textiles, clothing and footwear: 0.14%

Medical care: 0.11%

Furniture and household goods: 0.08%

(Items with decreasing costs)

Miscellaneous goods and services: -0.18%

Food and soft drinks: -0.13%

Beverages and tobacco: -0.12%

Recreation and culture: -0.01%

By: Cleofe Maceda

© Al Nisr Publishing LLC 2016. All rights reserved.

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