Doha / QATAR: An upturn in rents, coupled with costlier entertainment and medical services, resulted in Qatar’s cost of living to harden to 3.1% year-on-year (y-o-y) in July, according to official figures.
However, the consumer price index (CPI) inflation was rather flat compared to that in June 2013, implying the efficacy of measures adopted by the government in view of Ramadan, figures released by the Ministry of Development Planning and Statistics revealed.
Doha City – The Capital City of Qatar
According to the International Monetary Fund, Qatar’s average inflation is expected to be 4%-5% in the medium term; while Bank of America Merrill Lynch expects it to mildly harden this year and in 2014. The Rent, Fuel and Energy group, which is the most influential and carry the maximum weight of 32.2% in the CPI basket, saw its index surge 6.5% y-o-y in July and the index was up 0.10% from the previous month’s level.
After eliminating the effect of rent, although the overall index was unchanged from the previous month’s level, it “showed an increase of 1.9% when compared to July 2012,” said a spokesman of the Qatar Statistics Authority (QSA).
An EC Harris report had said Qatar’s construction inflation could peak to 18% during the World Cup building boom between 2016 and 2019, potentially adding billions to the cost of development and overheating the economy. In 2013, Qatar is expected to witness hardening of inflationary pressure as falling rents would be stripped out of the equation, according to HSBC economists.
Among the other sectors, the highest inflation was seen in Entertainment, Recreation and Culture, which carry a weight of 10.9% in the CPI basket, as its group index shot up 9.3% compared to July 2012. It was up 1.2% from the previous month’s level. Medical Care and Medical Services, with 2% weight, reported a 2.5% increase y-o-y in July 2013 and the index rose 0.2% compared to the previous month level.
Food, Beverages and Tobacco, which has a weight of 13.2% in the CPI basket, saw 1.9% acceleration y-o-y in April 2013; while the index was down 0.8% from June this year. The month-on-month fall in food inflation was “because of discounted prices during Ramadan”, the spokesman said.
Furniture, Textiles and Home Appliances, which has a weight of 8.2% in the CPI basket, saw its group index rise 1.4% y-o-y but the index had risen 0.3% from June 2013. Transport and Communication, with a weight of 20.5% in the CPI basket, also witnessed its index gain 0.6% y-o-y in July this year and the index was up 0.2% from the previous month’s level.
Garments and footwear group, which carry 5.8% in the CPI basket, saw their price rise 0.4% y-o-y in July this year and it was up 0.5% from the previous month’s level.
However, miscellaneous goods and services, which carry 7.2% weight in the CPI basket, saw its group become cheaper by 3.2% y-o-y in July 2013. The index was down 1.3% from the previous month. The QSA primarily attributed it to “a decrease in the gold price and hotel booking price.”
Sources: Gulf Times, The Peninsula, Caye Global News
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