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Wed 18 Nov 2009 02:04 PM

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Qatar CPI falls 0.1% on month in October

Consumer Price Index now stands at 122.3, down 4.8 percent from the beginning of 2009 - authority.

Qatar's consumer price index, on a downward trend since the start of the year, fell 0.1 percent in October from a month earlier, according to Qatar's statistics authority on Wednesday.

Inflation has fallen sharply in the Gulf Arab region as the global economic slowdown slashed food and property prices.

Qatar's CPI now stands at 122.3, down 4.8 percent from the beginning of 2009, the authority said in a statement.

Food prices fell 2.3 percent in October, compared to September. Rents, which declined by an overall 3.3 percent in the same period, are now 13.8 percent lower than prices in January 2009.

"With the increase in supply of housing, property rental prices have fallen sharply in 2009, resulting in negative inflation," said Monica Malik a senior economist at EFG Hermes in Dubai. "The housing sector has been a key driver of inflation in Qatar over the last few years."

While property prices are expected to stabilise next year, the main driver for inflation next year will "external factor including the U.S. dollar weakness", Malik said.

Qatar pegs its currency to the dollar, which hit 15-month low against major currencies. Inflation rates are expected to climb back towards 2008 levels, when it reached 15 percent.

"It could be the disinflation reaches an end in the coming months due to continuous dollar weakenss but I do not expect inflation to climb in a threatening way," said John Sfakianakis chief economist at Banque Saudi Fransi-Credit Agricole Group.

"The domestic economy in Qatar is still playing a greater deleveraging factor than US dollar weakness," said Sfakianakis.

Qatar's economy is forecast to outpace other Gulf Arab economies this year. Earlier this month, Qatar's emir Sheikh Hamad bin Khalifa Al-Thani forecast the economy would grow by 9 percent this fiscal year and by 16 percent next year. (Reuters)

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