Abu Dhabi cost of living increase leaves residents feeling the squeeze

One resident said that people are even relocating members of their families home in order to save money

Researchers will examine the spending habits of thousands of families throughout 2019. Mona Al Marzooqi / The National

UAE residents are feeling the squeeze due to rises in the cost of living in the first quarter of the year, driving many to find more ways to save money.

Statistics released on Sunday by the Statistics Centre - Abu Dhabi show that consumer prices rose by 2.7 per cent in the first quarter of 2018 compared to the same period the previous year. Inflation in the capital is also running at 3.9 per cent, according to the report, with the rise mainly driven by increases in the cost of transport, food and beverages.

Svetia Deshais, a financial planner based in Abu Dhabi who runs a Facebook group called Money Doctor, said members are looking for more ways to save. “People are not necessarily struggling but they are changing their lifestyles, and definitely adjusting to the situation,” she said.

A recent discussion on the group’s Facebook page about children’s birthday parties attracted a flood of comments. “Before, you kept up with the other [parents] at school and spent Dh2,500. Recently, I did a challenge to save money [on my children’s birthday party] because I just can’t do it,” said Mrs Deshais.

“We don’t have that cash. The cash goes elsewhere for the increase in electricity or petrol.”

Increases in the cost of living are forcing many of her group's members to cut costs too. Some are making savings in areas like clothes, utilities and accommodation. Many are downsizing, she said, and she has heard that more people are relocating members of their families home in order to save money.

“I hear more and more that a husband has relocated their wife and children back to the UK because it is more expensive to live here,” said Mrs Deshais. “If you have one child you kind of get by, but if you have three and you want to sustain the curriculum they need for the future, it is really hard.”

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Read more:

Abu Dhabi inflation rises 4.7% in January as drop in rentals subdues VAT

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The cost of education has been a major factor in Sinead McParland family’s decision to return to Ireland this summer. The education allowance she receives as part of her package as a lecturer was cut by 50 per cent last summer, leaving her to cover a Dh60,000 shortfall in the cost of her two children’s fees.

This, coupled with the general rise in the cost of living, proved the final straw.

“There are people who have been here years and years. They have built up a buffer and had the good times. They are kind of now looking at it like okay, we have had a good run,” said Mrs McParland, 41, from Ireland. “Whereas people like me, who have only been here for four years, all I have seen is decreases in my salary and increases in other things. And I think that’s been a massive factor [in deciding to move home].”

While many recognise that rises in the cost of living are inevitable as a result of VAT, some have said that prices have increased much more than 5 per cent.

“Dining out, shopping, services, entertainment, utilities and transportation have increased much more than the 5 per cent explained by VAT. This has been observed also by several guests, who visited several times over the past few years,” said one Abu Dhabi resident, who did not want to be named.

“While education is the same as before and housing is cheaper, with rents down 10-15 per cent, that is offset partly by the municipality fee. So the net hike depends on how things are weighted, I guess 2.7 makes sense if housing is weighted high.”