Qatar consumer prices fall by 4.9% in 2009

Price deflation aggravated by the end of property boom, which sent rents sliding.
Qatar consumer prices fall by 4.9% in 2009
By Regan Doherty & Martin Dokoupil
Tue 16 Feb 2010 07:40 PM

Consumer prices in Qatar fell by 4.9 percent in 2009, more than expected as the Gulf state suffered its first full year of deflation since 1993 due mainly to a slump in property rents, official data showed on Tuesday.

A Reuters poll had forecast 4 percent deflation last year.

Qatar's energy wealth enabled it to spend its way out of the global downturn last year and the economy grew 11 percent.

But the global financial crisis put pressure on prices across the Gulf region, ending record high inflation which in Qatar peaked at 15.2 percent in 2008.

Price deflation was aggravated by the end of a property boom, which sent rents sliding.

Data on Tuesday showed that Qatar rents and utility charges, which account for 32 percent of the consumer price basket, dropped 12 percent in 2009, reversing a 19.7 percent jump in 2008.

Transport prices, the second largest component, fell 4.4 percent, after rising 9.3 percent in 2008. Food prices rose just 1.3 percent in 2009, down from a 19.9 percent rise in 2008.

Data released last month showed that Qatar's consumer prices fell for a seventh straight month in December on a monthly basis as rents continued to decline.

The central bank and analysts expect prices to pick up this year as the economy accelerates.

Farah Hersi, senior economist at Masraf Al Rayan in Doha, said: "The main drivers for inflation for this year are twofold."

He added: "There is a lot of pent-up demand in the economy, as it is the fastest growing economy in the world - even beating China ... and there are some specific items in the household basket, such as food, clothes and footwear, which are contributing ... to inflation this year."

Qatar's central bank projects inflation of between 2 and 5 percent in 2010.

Analysts forecast the economy will surge 16 percent in 2010, outperforming Gulf neighbours thanks to new energy projects and the state's status as the world's biggest producer of liquefied natural gas. (Reuters)

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