As global inflation soars, consumers in the UAE plan to adjust their lifestyle by reducing their household and miscellaneous expenses over the next three months, according to a 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, the survey found that the top two areas for cutbacks are clothes/apparels and fuel.
Other areas likely to see major reductions are eating out, weekend activities and luxury spending.
Spending on holidays
Not all bad news as most consumers will continue to spend money on holidays, new cars, mobile/ broadband/ TV / OTT subscriptions, beauty/ grooming products, gym membership, home furniture and electronics.
Asked which areas they will reduce their spending over next three months in view of the rising prices, 26% of those polled cited clothes as the top area to make the reductions. The next highest-ranking issue, named by 15% of respondents, were petrol expenses. A further 9% of residents believe weekend activities, dining out and luxury products as the top three areas to make cutbacks in the next three months.
In terms of gender, women (31%) as opposed to just 24% of men, expressed they would reduce expenses on clothes first, then other areas. In fact, clothes/ apparels and petrol ranked as the first and second areas, respectively, to see cutback by residents across all age groups, income groups, Emirates in the UAE as well as nationalities (consisting of Emiratis, Arab expats, Asians, Westerners and others) in the survey.
Emiratis at forefront
Emiratis were at the forefront when it comes to reducing spending on clothes and petrol with 35% ranking clothes and 20% ranking petrol as the top two cutback areas, followed by Westerners (28%).
However, in terms of reducing spending on luxury products, just one% of Emiratis (the least among all respondents) consider it as the top area for cutback, compared to 20% (highest among respondents) 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 (29%), 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.
Committed to saving
However, in spite of the rising cost of living, 97% of consumers surveyed still remain committed to saving for their future with only 3% 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% of them ranking these items on top, while just 2% plan to prioritise cutting expenses on a new or economical car, holidays, non-essential personal care/ beauty products and entertainment activities.
Likewise, 99% of consumers are in favour 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% of them ranking each of them as the top areas for cutbacks.
Cost-of-living squeeze
“The cost-of-living squeeze is under way among many UAE consumers and it’s not a surprise to see a little over a quarter planning to reduce their spending on clothes and fuel. What is rather encouraging is that despite the financial squeeze the vast majority are not looking to reduce their savings plan contribution,” said David Kneeshaw, Group Chief Executive of IFGL, which owns FPI.
Stuart Shilcock, Head of Sales at FPI added: “Every observation of the survey is offering key insights into what matters to UAE residents right now. It’s belt-tightening time for UAE consumers as they plan to continue cutting back on their discretionary spending over the next quarter. As the survey reveals, consumers are adopting a mindful approach to saving money in order to brace for the rising cost of living."-- TradeArabia News Service
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