Qatar’s annual inflation rose to 2.1 percent in August, helped by rises in clothing prices, and Reuters polling showed it will continue to edge back toward the much higher rates seen in other Gulf states.
The world’s top liquefied natural gas exporter, spared the popular unrest that has hit other parts of the Arab world, returned to annual inflation last December after a protracted period of deflation.
Figures from its statistics agency showed inflation is still well below that in its regional peers, with a Reuters poll on Wednesday showing Saudi Arabia and Kuwait will see price rises of around 5.0 percent next year.
Qatar has promised to hand out salary, pension and benefits increases for state and military employees worth as much as QR30 billion ($8.24 billion) and analysts expect that will help bring average inflation to 2.7 percent in 2011 and 3.5 percent next year.
Qatar, set to host football’s World Cup in a decade, also plans to spend over $125 billion in the next five years on construction and energy projects and the OPEC member’s economy should keep growing strongly.
“The annual inflation figures will continue to rise if there is price pressures from the other categories as there has been,” said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi. “The effect of the rent category on CPI is slowly disappearing.”
Transport prices, accounting for 20.5 percent of the price basket, increased 0.8 percent on a monthly basis after being unchanged in July.
But the rents, fuel and energy component dipped 0.5 percent month-on-month following a 0.8 percent decrease in July, while food prices, making up 13.2 percent of the basket, dropped 1.8 percent month-month in August after a 0.5 percent fall in the previous month. Clothing jumped 3.5 percent.
On a monthly basis overall, consumer prices rose 0.2 percent in August after a 0.3 percent decrease in July, the data showed, and one economist said that offered little sign of steady rises to come.
“It may be the highest rate in a year, but a 2 percent rate of price growth is still very low and such a modest rate of month-on-month growth doesn’t suggest to me the start of an upward trend,” said Simon Williams, HSBC’s chief economist for the Middle East and North Africa.
“I don’t expect to see much change over the rest of this year, even when the salary hikes take effect. There is still spare capacity in the Qatari economy and the pay rises will effect too small a proportion of the overall population to have much of an impact on overall price levels.”
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