SHARJAH, 4 June 2005 — Thousands of Indian and other foreign workers in the United Arab Emirates are opting to send home their families in the face of soaring cost of living, particularly rents, and to share bachelor apartments.

In many cases, landlords have increased rents by as much as 70 percent, taking advantage of the rising demand brought about by a steady flow of foreigners into the country to take up employment or to launch businesses.

While there is no definite price index to peg inflation, a summary survey finds prices of consumer items have gone up by around 25 percent in the last two years. Unofficial figures released early this year put the rise in cost of living at an average 20 percent.

Government statistics say inflation in the UAE rose from 3.1 percent to 4.7 percent last year. However, there have been up to 40 percent increase in rents and over 20 percent increase in the prices of essential products and services including fuel, cooking gas, tuition fees and food items.

There is high liquidity in the market, brought about by high oil prices, and banks are offering loans at low rates in fierce competition with each other. However, the working class and the lower middle class are hit hard.

Experts say that the cost of consumer products is more or less at par with international prices, but rents are way too high. As a result, most middle-income Indian expatriates are sending their families home and moving to cheaper, shared accommodations.

“My rent was 15,000 dirhams a year. But last month my landlord raised it to 22,000 dirhams,” said Balachandran, who works as a salesman for an engineering products company.

“Then came an increase in school fees for my two children, another addition of some 2,000 dirhams a year; prices of school uniforms have been raised; the private bus that takes my children to school now costs 50 percent more, not to mention the rising cost of food and other items.

“I have no option but to send my family home and shift my children to a school near our home in Kerala beginning next academic year,” said Balachandran, who makes about 6,000 dirhams a month.

Balachandran’s case is typical of thousands who work in the private sector.

The governments of the various emirates have offered a salary increase of 25 percent for nationals and 15 percent for foreigners. That hike is blamed for the latest bout of price rise.

The central government in Abu Dhabi has warned traders against jacking up prices and instructed the Ministry of Economy and Planning to monitor prices and keep them under check. But officials and experts say it will be difficult to control prices as the country has an open-market policy.

The government has set up a team to explore bulk buying of commodities to guarantee steady prices and protect consumer interests. Some supermarket chains and cooperatives have promised to freeze prices of some 70 to 80 basic items like milk, sugar, dairy products for at least six months.

But freezing prices of select consumer items alone is unlikely to stem the tide of a reverse migration.