Gulf Arab states are working to align by next year the methods they use to calculate consumer price inflation in preparation for monetary union, a Gulf Cooperation Council (GCC) executive said.
Most Gulf states will begin using 2007 as the base year of the consumer price indices (CPI) by 2009, said Naser al-Kaud, GCC deputy secretary-general.
Countries in the region have conducted household spending surveys to change the weights of their consumer price baskets, with Saudi Arabia, the UAE and Oman agreeing to begin using the new baskets by the first quarter, Kaud said.
Qatar and Bahrain are also modifying their CPI baskets this year, while Kuwait has not yet committed to when it will change its basket, he told Reuters.
“Unifying the approach makes it easier and more meaningful to compare the inflation in each country and that is important not just for monetary union,” Kaud said.
The oil producers, except Oman, are negotiating a single currency by a 2010 deadline many policymakers have said would be very difficult to meet.
Gulf states should improve their statistical capacity to provide more comparable economic and financial data for monetary union, the Dubai International Financial Centre said last month.
Currently, the UAE releases inflation data annually and usually months after the end of the year. Saudi Arabia, Kuwait, Bahrain and Oman release inflation data monthly, while Qatar does so quarterly.
The UAE economy ministry said in June it planned to modify its CPI to reflect price trends more accurately and to release data monthly beginning next year.
An inflation target of no more than 2 percent above the regional average has been the most contentious of the European Union-style convergence criteria agreed by Gulf states.
Inflation ranges from 3.1 percent in Bahrain to almost 15 percent in Qatar.
The countries are discussing modifying the inflation criterion of the plan to measure core inflation, which strips out the impact of soaring rents, a Qatari official said on Sunday.
“Core inflation is the most stable because it is not affected by sudden changes in real estate,” said Kaud, who attended a regional meeting on Sunday where the issue of core inflation was discussed.
Any change in the convergence criteria – which refers to CPI inflation – would require approvals from Gulf rulers, he added. (Reuters)
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