Saudis struggle to save money, says survey



JEDDAH : DIANA AL-JASSEM

Published — Tuesday 23 April 2013

Last update 26 April 2013 10:02 am

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Sixty percent of Saudis save less than 10 percent of their monthly salary, according to a survey conducted by souqalmal.com.
Saudis have been struggling to manage their financial resources within the higher inflation rate in the Kingdom and limited wages for middle-class people.
A recent report issued by Jadwa Investment confirmed that the Saudi consumer price index (CPI) inflation maintained the 3.9 percent year-on-year increase for the third consecutive month in March. It slightly increased to 0.3 percent on a monthly basis. According to the report, the main contributors to inflation are food and housing rent components.
Financial experts have said Saudi families lack awareness on consumer consumption and financial management.
“The reality is that many Saudis are using all their income to support themselves and their families and find saving difficult; the Saudi saving culture is weak.”
The Saudi knack for ostentatiousness makes them struggle to survive. Many reports confirm that Saudis are one of the highest spenders in the MENA region,” said Essam Khalifa, a member of the Saudi Economic Association.
According to a statement issued by the Conservation Delivery Streamlining Initiative (CDSI), all but two sub-components of food inflation have increased in the last month compared to a year ago, namely sugar and other food products.
Khalifa confirmed that Saudi Arabia is importing inflation since most of its imports are consumer-driven.
“The inflation rate is increasing annually, while the purchase power of the Saudi Riyal recently decreased by 50 percent. In addition, Saudis are killing their budget by paying off loans that cut 25 percent of their salaries. There is no doubt that banks are competing to offer attractive loans. Unfortunately, most Saudis are unaware of the danger of loans. These loans are given for goods that are not necessities, such as luxury cars, traveling to Europe and buying jewelry,” he said.
Majed Muftah, a real estate developer in Jeddah, stated that most Saudis are now demanding low rent and are still unable to pay on time.
“Due to inflation and unfixed minimum wages that most middle-class families are receiving in the Kingdom, Saudis demand low-rent apartments. I receive many Saudis who ask to pay the rent divided in three installments. They refuse to pay two installments where they cannot manage their financial resources. When I compare expats ability to rent with Saudi ability, I found that despite inflation, expats succeed in paying rents on time. I believe that expats are more aware of how to save money,” he said.
He added, “Most Saudi families also feel financial stress with 10 percent of those who pay the two installments on time.”
A report issued by Jadwa Investments have assured that rent inflation is expected to increase, where rent and the housing-related service price index increased by 3.1 percent in March versus 2.6 percent in February.
Jadwa Investment considered this increase the highest increase in housing inflation since June 2012, as the rent component accelerated to 3.7 percent year-on-year compared with 2.9 percent in the previous month. Housing inflation is expected to remain elevated, as the most recent government housing initiatives are likely to only ease housing market pressure in the long-term.
Arab News spoke to a Saudi bank officer who receives a monthly salary of SR 10,000, where he confirmed that families that receive SR 10,000 or less wouldn’t be able to save any of their salary at the end of the month. “I got a monthly salary that is to be considered fair enough, but I couldn’t manage my family expenses. I am suffering many factors like inflation and consumer needs prices, in addition to high rents and high school fees,” said Jamal Abdullelah.

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