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Decline in rents offsets inflationary pressure on utility services, food and education

Dubai: The recent Worldwide Cost of Living Survey has revealed that Dubai has become more affordable as the emirate has been ranked 94th, 16 places lower than last year.

The index, published by the Economist Intelligence Unit, measures the cost of an expatriate lifestyle in more than 130 cities. It takes into account the weighted average of the prices of 160 products and services, including housing, food, clothing, transport and household goods as well as the relative strengths of currencies and economies.

Dubai residents believe the emirate has become an affordable city with highest living standards. Reacting to the index, they said that rents have fallen but costs of essential commodities and utilities have risen.

Mahnaaz Shaikh, an Indian homemaker in the emirate, has been handling the family finances for the past five years. She told Gulf News, "I have experienced the increase in my grocery and utility bills. Though the rent for my one-bedroom apartment has dropped, several new increases like surcharge for utility — water, electricity and gas — bills and installation of new parking metres near my residence have been introduced. Essential commodities like milk, vegetables, fruits and meat, even luxury items like perfumes and cosmetics have gone up in the last two years."

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Rise in school fees

Cost of education — semester fees, transport, and tuition — has also risen in the past year, leaving parents with no choice but to bear the increase. A Dubai-based Australian parent, Jenny R., told Gulf News: "It is outrageous how much education costs. With the fees we pay here, we could put our kid in a top private school back home."

Commenting on the rising cost of education, French expatriate and mother of one, Najma R, told Gulf News, "For the past two to three years, I have witnessed a gradual rise in school fees as well as textbooks, tuition and transport costs."

Despite these factors, the cost of living isn’t as high as those of emerging markets, Simon Williams, chief economist for Middle East and North Africa (Mena) at HSBC, told Gulf News.

"Rents make a large part of the consumer price basket, and these have fallen significantly, offsetting any pick up that might have been in any other categories. I suspect if the cost of living has risen at all, it is at the margin, and pales when set against the more substantial increases we have seen in emerging markets, particularly Asia."

Shady Shaher, economist for Mena at Standard Chartered, said the rent and housing component is such a large part of the inflation basket that it overwhelms any inflationary pressures coming from other components such as food, transport, clothing, etc.

He told Gulf News, "The fact that Dubai has dropped 16 places in the Worldwide Cost of Living Survey means it has become a more competitive city for businesses to operate in. It’s good news."

Gulf News also asked Dr. Hashim Al Nuaimi, director of the consumer protection unit at the UAE Ministry of Economy, whether the prices of commodities have increased. He said, "Everyday items like rice, sugar, eggs, flour, oil, etc. have not increased in the past two years."