Qatar’s inflation jumps by 14%

QATAR’S inflation is estimated to have risen by about 14% year-on-year in 2007 as the country reeled under surging rents.
The Consumer Price Index (CPI), with 2001as base year, stood at an average 151.56 points compared with 133.23 in the year-ago period, translating as about 14% jump in the household consumption group, according to data published yesterday by the General Secretariat for Development Planning (GSDP).
“The increase (in prices) concentrated mainly in rent, fuel and energy group, particularly in rental prices of dwelling,â€‌ GSDP said.
Official inflation statistics from Qatar Central Bank (QCB) have not yet been released.
Rent, Fuel and Energy — which carry the maximum weight in the CPI basket, rose by more than 29% year-on-year in 2007. The group’s index was 287.04 points compared with 221.94 in 2006.
HH the Emir Sheikh Hamad bin Khalifa al-Thani yesterday issued a decree on the new rent law as part of efforts contain the rising prices.
However, the Economist Intelligence Unit (EIU) had said it had become increasingly apparent that the government’s efforts, including the imposition of a 10% rent cap, to bring down rocketing rents had had little success, as the growth in supply of properties has failed to keep up with the rising demand caused by the influx of foreign workers.
Forecasting that price levels may remain high, the International Monetary Fund had said “containing inflation over the medium term calls for restraint in current expenditures and the phasing of development expenditures as part of a well-designed fiscal policy and for continuing efforts to address problems related to supply-side bottlenecks, especially housing shortages.â€‌
According to Marios Maratheftis, Standard Chartered Regional Head of Research (Middle East, North Africa and Pakistan), inflation would remain high even if the housing shortages were to ease since the money supply was growing “alarminglyâ€‌ at 40% and hence suggested a one-off 20% revaluation in riyal.
In view of this, QCB has tightened its monetary policies by increasing the cash reserve ratio for bank by 50 basis points to 3.75% as part of its efforts to suck out the excess liquidity.
Food, beverages and tobacco prices grew by more than 7% as the group’s index averaged 123.85 points compared with 115.36 in the year-ago period.
Prime Minister HE Sheikh Hamad bin Jassim bin Jabor al-Thani recently said the Cabinet was discussing a food subsidy plan to stem inflation, even as the EIU said the price controls on certain commodities could backfire.
Garments and footwear became costlier by about 13% in 2007 as its average index stood at 128.87 points against 114.46 in the previous year.
The average index for furniture, textiles and home appliances stood at 116.88 compared with 110.87 in 2006, translating as more than 5% jump in their prices last year.
The entertainment and miscellaneous goods and services became costlier by about 5% each in 2007, while that of transport and communication’s rose by more than 2%.
The index for medical care and medical services averaged at 105.84 points in 2007 against 104.55 in the previous year, implying a growth of above 1% inflation in the sector.