Energy and water costs go up 15% in Dubai from January 1st
Posted on 09 December 2010 with no comments from readers
2011 is already shaping up to be a year of inflation with news that Dubai water and electricity charges will go up by 15 per cent across the board from January 1st.
The announcement from the Supreme Council of Energy in Dubai will come as a nasty shock to some residents but is not that surprising given the series of hikes to petrol prices over the past year, and the holding of utility prices.
Inflation hike
It is, however, a big increase in the cost of living for most expatriates whose companies do not pick up these bills, and a charge on business costs in a city where many businesses are still struggling after the worst recession in living memory. You also have to wonder what comes next in 2011?
Certainly food prices seem destined to rocket. This appears to be partly a consequence of money printing by the US and China to offset the impact of the global financial crisis two years ago.
How much higher will food baskets go? China is threatening higher interest rates to reign in food cost rises of around 20 per cent. This will clearly be an additional burden on family incomes.
Inflation in 2010 was felt mainly in the rising cost of healthcare and education. Housing costs fell with rents under pressure from the fall-out of the real estate crash. Oversupply of apartments should keep the lid on rents in 2011.
Transportation costs
But transportation costs will likely rise with some oil analysts predicting above $100 a barrel, and that would mean higher prices at the pumps too. Higher industrial commodity prices should also begin to find their way into the price of finished goods, from cars to iPads.
Households have no alternative but to cough up. Investors need to think carefully too about the impact of inflation on their portfolios. What is bad for business profits will also be bad for share prices. Bonds will be a lousy investment in this environment, and as interest rates move up that will push real estate prices down again.
No wonder then that gold, silver and oil will be the asset classes to own in this environment. It is a developing story that ArabianMoney.Net will be following, though only our newsletter subscribers will have the full picture of where and how to invest to profit from inflation (click here to subscribe).
