The word on everyone's lips right now is inflation and even the best economies are finding it hard to shield themselves from the rises. In the UAE residents are feeling the pinch and inflation has led residents to cut back on spending with many planning to trim their expenses further this year. The UAE has one of the lowest levels of inflation globally with the figure expected to hit 3.7% this year. The country's Consumer Price Index (CPI) jumped to 102.70 points in Q1-22, compared to 99.37 points in the year-ago period.
The main driver of inflation in Dubai in recent months has been transport costs, which were up 28.8% year-on-year in April, accounting for around half of headline inflation. Across the way, in Saudi Arabia, rising inflation was also beginning to take hold. The annual consumer inflation rate surged to 2.3% in June, from 2.2% in May, according to the latest data released by the General Authority for Statistics. The slight uptick in the inflation rate was primarily driven by a rise in food and beverage prices.
Why it matters
In general UAE, Saudi Arabia and the Gulf as a whole have primarily done well to protect themselves from rising inflation and its impact - compared to other developed nations around the world. This is mainly due to the boom in oil and gas prices as well as the push by GCC nations to diversify investment both locally and internationally. The top-down confidence clearly has had a trickle-down effect with 39% of UAE residents being hopeful and expectant that their household’s financial situation to become better in the future.
