Government to review Emirates' spending habits

Thousands of households will have their spending tracked from next year as the UAE plans to rejig the basket of goods and services that make up the consumer price index.

The spending habits of thousands of households will be tracked from next year as the UAE reviews the official basket of goods and services to more accurately reflect consumer outlays in areas such as housing, food and mobile phones.

It is designed to take account of changes in spending patterns and in the overall economy after the previous overhaul of the basket five years ago.

"There may be changes to the weighting given to housing and other areas like technology but also differences in the weighting between Emirates, so Abu Dhabi compared to Dubai," said Sufyan Barghouti, an expert on economic statistics at the National Bureau of Statistics. At the moment, housing services, made up of rental and utility bills, is the biggest component of the index, accounting for 39 per cent of the basket.

But since the global financial crisis of 2008 property prices slid by more than half from market peaks. Electricity and water bills have risen, however.

As overall inflationary pressures have waned in recent years, consumers have commonly complained the official rate does not accurately reflect how much they are spending. Food costs in Abu Dhabi surged 7.5 per cent last year. But the rise did not make a big dent represents in headline inflation as food prices only 13.9 per cent of the overall UAE basket.

Other components of the basket have also changed. Fuel costs have risen after the Government raised petrol prices twice during 2010. Education fees have edged up, too.

Changes have also taken place in consumer spending patterns. Technology is increasingly popular, with more people spending on mobile phones and internet use.

The survey will assess the spending habits of about 10,000 national and expatriate households.

Consumers will be asked to record every item they spend cash on over the course of a year. The results will give the bureau an idea about how much is spent on different items and be used as a basis for refining the composition of the basket.

Elements for the current basket have been fixed since 2007.

The IMF has encouraged the country to regularly update inflation data to ensure its accuracy and relevance as important economic indicators.

Little pressure from housing costs and an easing of food costs have helped to keep inflation tamed so far this year. Consumer prices rose 0.6 per cent in March compared with the same month last year, according to the bureau. Inflation reached 11 per cent in 2007 as prices for property, oil and other commodities soared.

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