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 the latest 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 conducted on 880 respondents in the UAE, reveals that more than a quarter (26%) of consumers rank clothes as the top area to cut back their spending on, while 15% consider petrol expenses as the first item to trim their expenses. A further 9% of residents believe weekend activities, dining out and luxury products as the top three areas each 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) according to this survey.
Among nationalities, 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 percent of Emiratis (the least among all respondent) 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.
However, despite a severe squeeze on their finances due to higher prices, 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.
"This survey demonstrates that the cost of living crisis is beginning to impact the finances of people living in the UAE. However, the silver lining is that while consumers are controlling their spending and re-adjusting priorities, the majority of them still remain committed to saving for their future. The survey also offers an opportunity for businesses across the UAE to get a sense of the challenges that residents face in a period characterised by high inflation," said David Kneeshaw, Group Chief Executive of IFGL, which owns FPI.
Stuart Shilcock, Head of Sales at FPI, said, "Every observation of the survey is offering fascinating insights into what matters to UAE residents right now. Faced with inflationary pressures, consumers are themselves having to tighten the purse strings. Having said that, the competition for share of wallet in the rest of 2022 is also getting intense in the UAE. It's, therefore, crucial for financial advisers to ensure the productivity, value and efficiency of their products and services to align with changing consumer preferences. That's the challenging aspect of the circumstances we are in."