Monday, September 12, 2005

Data-starved Dubai to get new inflation index :: Reuters


The statisticians at the Dubai Chamber of Commerce told Reuters the business community had been pressing for a better measure of inflation in Dubai, the region's booming commercial hub where prices are skyrocketing.

The new index will reflect the different spending patterns of the various communities of Dubai, where most of the UAE's huge expatriate population lives, said Marietta Morada, who heads the project at the chamber, a quasi-government body.
. . .
Few analysts pay much attention to inflation measures in the UAE, a federation of seven emirates. They say the basket of goods used does not reflect the realities of life in the Gulf state, where over 80 percent of the population are foreigners.
. . .
Official figures show UAE consumer price inflation was 4.7 percent in 2004. But some analysts say that in Dubai the rising cost of rent, healthcare and schooling pushed it closer to 8 percent.
. . .
Morada said the index would be based on the Dubai household expenditure survey of 1998. "Unfortunately that is the latest and best starting point we have," she said.

The UAE has long counted on low taxes and an affordable standard of living to lure foreign firms and expatriates, who are driving its transformation from oil economy to financial centre. But the cost of everything from rents to school fees is surging. On top of that the UAE raised petrol prices by up to 32 percent from this month.

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Anonymous Samson Alva said...

Having lived there my whole life until 2001, I can say that inflation never seemed very high until the late 90's and early 00's. I visited Dubai this past June after 4 years, and I am amazed at how much prices for everything have gone up. I would venture that prices for most of the good have gone up 40 - 50% since I was last there. And from talking to family and friends there, I get a similar picture.

4:17 AM  
Anonymous Acad Ronin said...

Anybody keeping track of the price of a Big Mac?

6:29 AM  
Anonymous dark horse said...

Increases in government fees for a range of services, particularly labour-related and residency fees, have also driven up companys' operating costs. Will we see the private sector relocate to potentially lower cost environments in neighbouring GCC countries?

10:04 AM  
Blogger John B. Chilton said...

Dark Horse:

Interesting prompt. From my ivory tower I don't learn much about changes in fees.

A question always is when does a fee cross the line and become a tax.

My hunch is that part of Dubai's business plan is to attract business with the view to taxing it. As you imply, the GCC countries are in competition for business. Ironically, it is exactly this competition that gives investors some confidence that there is a limit to the amount they will be squeezed.

11:01 AM  
Anonymous dark horse said...

It seems somewhat of a paradox that while admirable, diversification of the country's economic base to an end-user revenue stream, substantial hikes in input costs (labour in this case) may have the opposite effect.
A tax by any other name still stings...

1:41 PM  
Anonymous cynmun said...

I am looking for recent household income data for Dubai, Abu Dhabi, something in the 2000s that doesn't just compute the data through GNP...I saw research from 1995 completed by HSBC but nothing in the recent years. If anyone knows or has the data, please let me know.
Thank you.

8:05 AM  

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