Dubai, UAE- As inflation continues to soar regionally and worldwide, the UAE consumers are cutting down spending across sectors.
Rising inflation weighs in on consumers’ purchasing power by slowing or even reversing gains in real wages and wealth. It often forces households, especially low- and medium-income ones, to pull back on discretionary spending.
The cost-of-living squeeze is underway among many UAE consumers and it’s not a surprise to see a little over a quarter planning to reduce their spending.
Indeed, it’s belt-tightening time for UAE consumers as they plan to continue cutting back on their discretionary spending over the next quarter.
A recent survey conducted on 880 respondents in the UAE by Dubai-based consultancy Insight Discovery, on behalf of the global life assurance company Friends Provident International (FPI), a business regulated by the Central Bank UAE, revealed that consumers in the UAE plan to adjust their lifestyle by reducing their household and miscellaneous expenses over the next three months.
As the survey reveals, consumers are adopting a mindful approach to saving money in order to brace for the rising cost of living.
When asked in which areas they will reduce spending over the next three months due to rising prices, 26 percent of those polled cited clothing as the top area.
About 15 percent of respondents identified fuel costs as the second most important factor. An additional 9 percent of residents cite weekend activities, dining out, and luxury products as the top three areas in which to reduce spending over the next three months.
In terms of gender, women 31 percent as opposed to just 24 percent of men, expressed they would reduce expenses on clothes first, then other areas.
According to the survey, residents across all age groups, income levels, Emirates in the UAE, and nationalities cut back on clothing/apparel and fuel, respectively.
Emiratis were at the forefront when it comes to reducing spending on clothes and petrol with 35 percent ranking clothes and 20 percent ranking petrol as the top two cutback areas, followed by Westerners 28 percent.
However, in terms of reducing spending on luxury products, just 1 percent of Emiratis (the least among all respondents) consider it as the top area for cutback, compared to 20 percent by western residents.
The survey also shows that inflation is biting into budgets across all households, whether it is single individuals, married couples with no children or families.
One in three single individuals, and one in four married couples without children as well as households with families plan to cut down on clothes expenditure the most, followed by petrol.
However, in spite of the rising cost of living, 97 percent of consumers surveyed still remain committed to saving for their future with only 3 percent of them rank contributions to their savings plans as the top priority area to reduce spending.
Similarly, other areas that are not on the priority list to face the axe by consumers are utilities and non-essential food items (chocolates, biscuits/ cold drinks) with only 3 percent of them ranking these items on top, while just 2 percent plan to prioritize cutting expenses on a new or economical car, holidays, non-essential personal care/ beauty products and entertainment activities.
Likewise, 99 percent of consumers are in favor of keeping their expenses on mobile/ broadband/ TV and OTT subscriptions, beauty/ grooming products, gym membership, home furniture, and home electronics broadly unchanged, with only 1 percent of them ranking each of them as the top areas for cutbacks.