Inflation forces UAE consumers to ‘cut discretionary spending’

Consumers in the UAE plan to adjust their lifestyles by reducing household and miscellaneous expenses over the next three months as global inflation soars, a survey shows.

Dubai-based consultancy Insight Discovery surveyed 880 respondents in the UAE on behalf of Friends Provident International (FPI), a global life insurer regulated by the UAE Central Bank, and found that the two areas where spending cut the most were clothing/ Clothing and fuel.

Other areas that could see sharp declines include dining out, weekend activities and luxury spending.

Holiday consumption

Not all bad news, as most consumers will continue to spend on vacations, new cars, mobile/broadband/TV/OTT subscriptions, grooming/beauty products, gym memberships, home furnishings and electronics.

When asked which areas they would reduce spending in the next three months given rising prices, 26% of respondents said apparel is the area where spending reductions are most needed. 15% of respondents pointed to the number two issue being gas costs. Another 9% of residents see weekend activities, dining out and luxury as the top three areas to cut spending over the next three months.

In terms of gender, women (31%) said they would reduce spending on clothing first, followed by other expenses, compared to 24% of men. In fact, clothing/clothing and petrol were ranked first and second, with residents of all age groups, income groups, UAE emirates, and nationalities (including Emiratis, Arab expats, Asians, Westerners) cutting cuts and others people) under investigation.

The Emiratis are at the forefront

Emiratis lead the way in reducing spending on clothing and petrol, with 35% of clothing and 20% of petrol listed as the top two areas for cuts, followed by Westerners (28%).

However, when it comes to reducing spending on luxury goods, only 1% of Emiratis (the least of all respondents) see this as the top area to cut luxury goods, compared to 20% of Western residents (the highest among respondents) .

The survey also showed that inflation was eating into the budgets of all households, whether singles, married couples without children or families. A third of singles (29%), a quarter of married couples without children, and families with families plan to spend less on clothes, followed by gas.

Committed to saving

Yet despite the rising cost of living, 97% of consumers surveyed remain committed to saving for the future, with only 3% of them citing savings plan contributions as their top area to reduce spending.

Likewise, other areas not prioritized by consumers are utilities and non-essential foods (chocolate, cookies/cold beverages), with only 3% of them prioritizing these items and only 2% planning to prioritize cutting back on new vehicles or Expenses for budget cars, vacations, non-essential personal care/beauty products, and entertainment.

Likewise, 99% of consumers support keeping their spending on mobile/broadband/TV and OTT subscriptions, grooming/beauty products, gym memberships, home furniture and home electronics largely unchanged, with only 1% Each item is ranked as the main area of ​​reduction.

cost of living tightening

“Many Emirati consumers are facing a crunch in the cost of living and it’s no surprise to see just over a quarter plan to reduce their spending on clothing and fuel. Quite encouragingly, despite the financial crunch, But the vast majority are not looking to reduce their savings plan contributions,” said David Kneeshaw, chief executive of IFGL Group, which owns an FPI.

Stuart Shilcock, Head of Sales at FPI, added: “Each observation from the survey provides important insights on what is important to UAE residents right now. For UAE consumers, now is the time to tighten their belts as they plan for the next quarter Continue to cut discretionary spending. As the survey shows, consumers are taking a cautious approach to saving money in response to the rising cost of living.”- arab trade news agency