UAE shoppers pull back and stash cash as war drags on

Dubai: Amid rising uncertainty with the Iran-Israel war stretching beyond a month, consumer spending has moved to "defensive mode" with nearly two-thirds of UAE households cutting discretionary purchases and rather building their savings buffer, according to industry findings.

Besides, the UAE on Tuesday announced a sharp hike in fuel prices effective April 1, reflecting the escalating global crude oil prices amid the ongoing geopolitical and supply disruption, likely to further dampen consumer sentiment.

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About 65% of UAE households are now either spending only on essentials or are actively stockpiling, reflecting rising financial caution amid prolonged geopolitical uncertainty, according to strategy consulting firm Redseer Middle East. "Discretionary spending is sharply down," said managing director Sandeep Ganediwalla.

Spending on electronics, home furniture, and clothing has each seen 35-38% of consumers reduce or stop purchases entirely, according to the firm's research based on surveys, interviews, ecosystem discussions, and tech tools.

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Dubai, a global luxury retail hub, is seeing the sharpest impact, with consumers postponing big-ticket purchases. About 70% of luxury buyers have curtailed purchases, while 28% are buying only for major occasions such as weddings or festivals, and 24% are postponing it entirely, the fundings show. "Luxury and big-ticket discretionary retail are the hardest hit from the resident side," said Ganediwalla.

The shift in consumer behaviour comes as the Dubai government on Monday announced a $272 million (AED 1 billion) fiscal support package to cushion businesses from the economic fallout of the conflict that started February 28.

The UAE Fuel Price Committee on Tuesday announced monthly retail prices for April based on average global crude and refined fuel prices. Diesel prices were raised by 72% to AED 4.69 per litre, while petrol prices rose by 31-33% depending on the type, with the new prices ranging from AED 3.2 to AED 3.39 per litre.

UAE residents, historically under-savers relative to other expat populations, are now recording a behaviour shift with the ongoing war increasing uncertainty.