On the Money: Cost of living feels less costly when put in perspective
With all the talk lately of the cost of living in the UAE, you'd think we lived in one of the world's most expensive countries.
Sure, things such as high rents, school fees, the spiralling cost of food, a 50 per cent rise in the price of petrol over the past year, the higher price we now pay for catching (the markedly better) silver cabs in the capital and high utility bills in Dubai have all taken their toll on our personal finances.
And, yes, our ability to save a decent amount of money every month has been curtailed, not only by the rising cost of living, but also because our salaries have remained stagnant since the global financial crisis hit. This has also left many people who have overleveraged themselves, motivated either by greed or need, struggling to keep up with their credit-card and personal-loan payments.
On the flip side, rents have started to ease in certain areas, while the government has imposed a price freeze on 400 food staples, such as rice, flour, oil and sugar. And let's not forget: we don't pay tax here.
So let's put it in perspective.
When you put the UAE on a global platform, we are doing pretty well when it comes to comparing our cost of living with other cities around the world.
So we should be happy that we are not living in Tokyo, the world's most expensive city, where a loaf of white bread from the supermarket will set you back US$7.42 (Dh27.25) and a litre of milk $2.65.
Then again, it's all relative. One would assume that your salary and other benefits in Tokyo would be enough to keep you in good stead.
According to the Economist Intelligence Unit (EIU), which recently released its Worldwide Cost of Living 2011 index, there are a couple of surprise newcomers on its top 10 list of most expensive cities.
The biggest surprise? It now costs more to live in Sydney, Australia, than it does in London (ranked 15th), Hong Kong (22nd) or New York (49th), once the heavyweights of the index.
The EIU's index is a compelling read, especially when it comes to the top 10, which, as it turns out, is a reflection of some of the world's stronger currencies. Here's how it stands: 1. Tokyo; 2. Oslo; 3. Kobe; 4. Paris; 5. Zurich; 6. Sydney; 7. Melbourne; 8. Frankfurt; 9. Geneva; 10. Singapore.
"Of particular note is the rapid growth in the relative cost of living of Australian cities," the EIC says in its report.
Jon Copestake, the author of the report, is more to the point: "It is a shock."
How did Sydney go from one the world's cheaper cities to live to number 6 this year?
"This is the accumulation of a remarkable rise in the cost of living in Australian cities over the last decade, a period in which the value of the Australian dollar has moved from around 50 US cents to passing parity with the US dollar earlier this year," Mr Copestake wrote in his report.
Two years ago, Sydney was at number 32 on the index; 10 years ago, it was ranked 71st. Remarkable. But the Australian economy did come out of the credit crunch relatively unscathed, while the Reserve Bank of Australia was one of the few (if only) central banks in the world to continue raising its interest rates during the Great Recession.
The folks at EIC compared 400 prices across 160 products and services in 140 cities in 93 countries for its bi-annual index, which is released in June and December. It is a vital tool for human resources and expatriates negotiating remuneration packages.
However, the index does not include the cost of rent in its basket of goods, which contains such markers as grocery items, household supplies, clothing, domestic help and transport. All cities in the survey are compared with the base city of New York, which has its index set at 100, and everything is converted to US dollars.
Thanks to the dirham's peg to the floundering US dollar, the UAE sits just inside the top 100. But if the index included rent, I'm sure Abu Dhabi, which ranked 98, would have come in ahead of Dubai, which is sitting at 94.
Dubai is the most expensive city in the GCC, while the cheapest city is Jeddah in Saudi Arabia.
Sydney is my hometown, and when I speak to friends and family there, I get a weird sense of déjà vu. "Everything is so expensive here now," they moan.
They are right. I was back there in January and was surprised by how much more everything cost. It doesn't feel like the Sydney of old, when life gravitated around that glorious, once affordable outdoor lifestyle that the city is so famous for.
Then, when I speak to people in the UAE, I hear the same complaint.
Yes, it is more expensive here. But we can't expect everything to stay the same. Then again, if prices are rising, then that should be reflected in our salaries, which seem to be the only thing that hasn't moved in tandem with inflation and the higher cost of living in the UAE.
Our one saving grace is that we don't have to think about high taxes. Unlike Sydneysiders - or many other citizens around the world, for that matter.
Published: July 15, 2011 04:00 AM