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Sun 9 Feb 2014 01:12 PM

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Qatar inflation set to rise to 3.8% this year

Land, rent hikes to drive increase in inflation from 3.1%, according to Qatar National Bank

Qatar inflation set to rise to 3.8% this year
Qatar flag

Qatar’s inflation is expected to rise to 3.8 percent this year, compared to 3.1 percent in 2013, on the back of increased land prices and rents, according to Qatar National Bank.

Land prices began to recover in December and January following a nine-month decline between March and November, the bank said.

Taking into account a traditional six-month delay in the impact on rents, a slowdown in rent inflation is expected by mid-2014.

Rental increases slowed from 6.7 percent in the year to August to 4.8 percent in the year to December, according to Consumer Price Index (CPI) data released by the Ministry of Development Planning and Statistics (MSDP).

“As rents tend to follow land prices with a six-month delay, we expect rent inflation to continue to slow to below 4 percent between now and May, 2014,” QNB said.

“Our analysis confirms that there is a strong relationship between land prices and rent inflation.”

QNB expects land prices to continue to rise moderately, based on strong population growth. The Qatari population grew 10 percent last year.

Rent accounts for almost one-third of the total CPI in Qatar.

Other prices are expected to remain moderate, keeping overall inflation to about 3.8 percent, according to QNB.

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