New method to determine cost of living

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Place: Saudi Arabia

Story: New methods to determine cost of living

Since its inception in 1987, Saudi Arabias Department of Prices and Index Numbers Statistics (DPINS) has improved markedly. It shifted from providing a mere indication of price movements to generating a very precise and reliable tool for conducting any type of economic analysis.

From an index which was calculated manually on a quarterly basis and which covered only one city, the cost of living index has been developed into a tool capable of providing monthly and automatic price analyses for 16 Saudi cities Riyadh, Jeddah, Dammam, Abha, Buraidah, Tabuk, Al-Hafouf, Makkah, Madina, Taif, Hail, Arar, Sekaka, Najran, Al-Baha and Jizan.

Today, the cost of living index is issued for about 406 items. Each item has its own specifications that include the essential information that has an impact on a commoditys price. Prices are collected from selected stores based on a survey of points of sale carried out by the Central Department of Statistics and Information (CDSI) in 2001.

The DPINS oversees the price programs and indices and issues two bulletins; the program of cost of living index for the entire population and the program of indices of wholesale prices.

Mercer survey

Of 18 Middle East and North African (MENA) cities surveyed in March for cost of living relative to a benchmark of New York, all but two showed substantial declines from a year ago, according to a survey by the global human resources consulting firm Mercer; Saudi Arabian capital of Riyadh, which rose nine places to 135th, and Beirut, which advanced five to no. 75.

The reason given for the rise in Saudi was that as available rental properties in Jeddah are quite limited and the market is facing its greatest pressure in demand, property rentals have been increasing over the past months. This trend is expected to continue in the coming months.

In fact, by global standards the Middle East is a relatively cheap place to live. By far the most expensive city in the region is Tel Aviv, but it ranks only 24th. After that, Abu Dhabi comes in at 67 and Beirutat 75. The big expatriate center, Dubai, ranks 81 in the Mercer survey. Four cities rank among the worlds cheapest, including Manama in Bahrain, Kuwait City, Doha in Qatar and Rabat, Moroccos capital.

The cost of living in Dubai for expats fell because of declining rents and a tepid economy still struggling to recover from the real estate and financial crisis that hit in 2008.

The Dubai residential rental market is experiencing further rent decline. Weakening demand and huge supply are driving the market downturn. Many tenants have been moving from larger units to smaller ones, due to a reduction in household incomes and adoption of a more cautious approach towards household expenditure.

Sources: saudigazette, mercer, maktoob

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