When you feel the pinch in your wallet, how do you cut back?

Published March 30th, 2016 - 10:46 GMT
Household spending on transportation will go up further, by around 25 per cent for some drivers, if the new parking fees will be taken into account. (Shutterstock)
Household spending on transportation will go up further, by around 25 per cent for some drivers, if the new parking fees will be taken into account. (Shutterstock)

The increase in petrol prices, which will take effect next month, is expected to have a “noticeable” impact on consumer budgets in the UAE.

Residents interviewed by Gulf News said the oil price adjustment will likely increase their transportation spending by about 10 per cent. Household spending on transportation will go up further, by around 25 per cent for some drivers, if the new parking fees will be taken into account.

“My spending on petrol alone will probably increase from Dh150 to Dh200 a month,” said May, who drives a Mitsubishi ASX. The Dubai-based expatriate consumes about 126 litres of Special 95 a month just to travel to the office and back.

“If I’ll take into account other related expenses, like parking and carwash, the monthly budget could go up to Dh500. That’s already expensive for me,” she added.

But for some residents with higher incomes, the increase may not be too big enough to pinch the wallets. Besides, compared to other markets, petrol prices in the UAE will still be relatively cheaper.

"Compared to the UK, [the increase] is very reasonable," said Nichola Reece-Burton, another expatriate. Burton, who drives a Kia Sportage, expects her monthly petrol spending to go up from Dh250 to Dh275 a month.

For the first time since August, when the oil subsidies were removed, per litre prices of petrol will go up next month by about 10 per cent to 11 per cent, with Super 98 rising to Dh1.62 from Dh1.47, up 10.2 per cent, and Special 95 climbing to Dh1.51 from Dh1.36 (11.03 per cent). The price of E Plus-91 will increase to Dh1.44 from Dh1.29, an increase of 11.63 per cent, while Diesel will retail at Dh1.56, up 11.43 per cent from Dh1.40.

With the average UAE household spending about 11 per cent of their budget on transportation, the rise in petrol prices will be hard to miss. “The gasoline price increase will be noticeable and will be felt as a major spike [in consumer price index] in April 2016,” said Alp Eke, director, senior economist for global markets at the National Bank of Abu Dhabi (NBAD).

He said the impact of new prices on the CPI will be about the same as when the oil prices went up for the first time in August last year following the decision to link consumer oil prices to international markets.

“The contribution of transportation [in the CPI] spiked in August and September [last year], immediately following the deregulation. At the moment, since Brent price has increased to $40 from $28 since January 20, 2016, we can expect the transportation sector’s contribution to increase,” he added.

According to the data released by the National Bureau of Statistics in February, consumer price index in the UAE increased by 2.2 per cent year-on-year, driven primarily by the cost of housing and utilities.

By Cleofe Maceda 
 

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