Qatar’s annual inflation touched 2.8% in October due to higher rents and rising costs of food and entertainment, according to official figures.
The cost of living, based on consumer price index (CPI), rose 0.6% from the previous month, mainly on costlier food and furniture and higher rents, the Ministry of Development Planning and Statistics figures said.
Indicating a build up of inflation expectations in the economy, the top five of the influential eight commodities group witnessed faster price rise year-on-year (y-o-y) in October this year.
According to the International Monetary Fund, Qatar’s average inflation is slated 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, recorded the maximum increase of 6.2% y-o-y in October (against only 0.6% in 2012).
The y-o-y rise in rents in October this year was solely “due to a 6.9% surge in rents of residential buildings,” Qatar Statistics Authority (QSA) said. The index was up 0.8% from the previous month’s level.
After eliminating the effect of rent, the overall index was up 0.6% from the previous month’s level and it “showed an increase of 1.7% when compared to October 2012,” said a spokesman of the QSA, which released the figures yesterday.
QNB recently said the country’s inflation is expected to rise moderately to 3.6% this year and 3.8% in 2014 as higher infrastructure spending will result in a large inflow of workers, putting pressure on housing and prices.
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.
Transport and communication, which has a weight of 20.5% in the CPI basket, witnessed its index gain 1.7% y-o-y in October this year (compared to 1.5% in 2012). It was up 0.3% from the previous month’s level.
Food, beverages and tobacco, which has a weight of 13.2% in the CPI basket, saw 2.6% acceleration y-o-y in October. The index rose 1% from September this year. The steep rise in the food prices comes in the wake of expiration of price freeze announced during Ramadan.
The entertainment, recreation and culture, which carry a weight of 10.90% in the CPI basket, saw its group index shoot up 4.5% compared to October 2012. It was up 0.2% from the previous month’s level.
Furniture, Textiles and Home Appliances, which has a weight of 8.2% in the CPI basket, saw its group index surge 3.8% y-o-y and the index had risen 1.5% from September 2013.
Medical care and medical services group, which has 2% weight, reported a 2.1% increase y-o-y in October and the index was up 0.3% compared to the previous month level.
However, miscellaneous goods and services, which carry 7.2% weight in the CPI basket, saw its group become cheaper by 4.4% y-o-y in October 2013. The index however rose 0.4% from the previous month.
Garments and footwear group, which carry 5.8% in the CPI basket, saw their price fall 0.7% y-o-y in October this year while it treaded a flat path against the previous month’s level.