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On the Money: Past inflation makes this inflation look overinflated

Inflation rising to 3.1 per cent is not so dire when you remember that it was above 10 per cent just a couple of years ago.

Inflation. There, I said it. And it wasn't as hard as I thought it would be, despite it being one of the most dreaded words for consumers and their household budgets the world over.

Of course, there are worse things than inflation, such as natural disasters, stock market crashes and global economic meltdowns. And many of us have felt the effects of these over the past couple of years.

But if there's one economic indicator that hits the hip pockets of Mr and Mrs Average, it has to be inflation.

When prices go up, our money buys less. And nobody likes that.

But we all need food, a roof over our heads, transport and a range of other goods and services that are essential to living our lives (hopefully) within our means. Unfortunately, this is not always the case.

Annual inflation in the capital rose to 3.1 per cent last month, driven largely by food, rent, utilities and transport, the Statistics Centre Abu Dhabi (Scad) said in its monthly inflation report.

Broken down, Scad's latest figures show that food prices rose by 9.92 per cent. The rise in transport costs is easy to explain: the Government last year implemented two petrol price rises, giving it a total increase for the year of 11.4 per cent.

"The rise in consumer prices in February by 3.1 per cent compared with February 2010 caused a rise in the consumer prices for households in the 'lower class' welfare level of 4.8 per cent, while prices increased for households in the 'upper class' welfare level by 2.4 per cent," The National reported Scad as saying last month.

While this news might cause shivers of dread for many consumers - in particular, for the low- to middle-income earners - take a moment to cast your memories to 2007 and 2008, when inflation in the UAE hovered above the 10 per cent mark.

That's right, inflation was above 10 per cent just a couple of years ago. Those were the days when rents were even more sky-high than they are today thanks to massive demand outstripping meagre supply. Food security issues were also making the headlines every other day and many people were overextending themselves with the plethora of credit on offer, which also came with high interest rates.

So 3.1 per cent isn't all that bad, after all. In fact, it is quite average when you consider that many governments around the world aim for about 2 per cent to 3 per cent inflation.

There are exceptions to this rule, of course, and not every government has the best interests of their citizens at heart. Take Zimbabwe, an excellent example of extreme hyperinflation if there ever was one. Not so long ago, Zimbabweans literally needed a couple of truckloads of cash just to buy a loaf of bread. But then again, with inflation at an incredible 231 million per cent in the latter part of 2008, it was no wonder.

Back in the Emirates, more and more people are complaining about the cost of food. "I can't buy as much as I used to and I've not received a salary increase for three years," is the common cry.

But in a country that has to import about 85 per cent of its food, it is important to remember that it's not just internal factors at play here. First, there's the cost of bringing it to the Emirates, not to mention the carbon footprint it leaves.

Then there's the weather to consider - think floods, droughts, earthquakes, nuclear accidents - and you get the picture. There's no escaping it, but what happens outside of the UAE does affect food prices here.

But how do we keep our personal costs down when prices are going up?

We could try taking the bus or the Dubai Metro instead of our cars, or try to cut back on our favourite foods from home. We could go out less, or at least try some cheaper alternatives to entertain ourselves.

There are many expats who find it impossible to live without the comfort foods of home, and this can develop into an expensive habit. And anyway, what's the fun in being an expat if you can't live without your Vegemite, Marmite, maple syrup, Tim Tams, New Zealand lamb, Irish beef or obscure brand of rooibos tea from South Africa? You may as well stay at home if they are that important.

Vegemite, for the uninitiated, is as Australian as, well, meat pies and kangaroos. A viscous black, yeasty paste, you need to develop a taste for it as early as possible, preferably a few minutes after birth.

Call me un-Australian, but after a bad experience with Vegemite in my early teens, nobody eats it in my house. But weirdly, there's always a jar of it in our fridge, regardless of which country we are living in.

I guess I am as guilty as many other expats here when it comes to not giving up the comforts of home - even if I can't bring myself to eat it anymore.


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