Qatar CPI inflation unchanged in Dec

By Santhosh V Perumal/Business ReporterQatar’s cost of living, based on consumer price index (CPI), remained unchanged month-on-month for the second month in December despite marginal increase in rents and food price, according to official figures.The CPI inflation was, however, up 2.7% year-on-year (y-o-y) mainly on higher rents and costlier furniture and entertainment, the Ministry of Development Planning and Statistics figures found yesterday.Consumer prices are currently growing at a manageable 2.8%, but it is notable that rents (the single largest component of the CPI) are rising at a 6% pace. This trend seems likely to accelerate over the next few years as more pre-World Cup expatriates are attracted to the country, putting pressure on the existing housing stock, Samba Financial Group said in a report.However, this trend will be partly mitigated by reduced government demand for land, since most infrastructure projects are now in the construction phase (house prices - as distinct from rents - actually fell 6% from May to September) and due to a sizeable house building programme, it added.The Qatar Economic Outlook 2013-14 update recently said inflationary pressures are “unlikely” to subside in 2014 but measures to curb abuses of market power in local consumer markets are expected to help keep price rises in check.According to the International Monetary Fund, Qatar’s average inflation is slated to be 4%-5% in the medium term; while Bank of America Merrill Lynch expects it to “mildly harden” this year and in 2014.The rent, fuel and energy group, which is the most influential and carries the maximum weight of 32.2% in the CPI basket, recorded an increase of 4.8% y-o-y in December 2013. The index was up 0.2% from the previous month’s level.After eliminating the effect of rent, the overall index was down 0.1% from the previous month’s level, but “showed an increase of 1.9% when compared to December 2012,” said the ministry figures.Transport and communication, which has a weight of 20.5% in the CPI basket, witnessed its index gain 1.6% y-o-y in December 2013. However, it was down 0.2% from the previous month’s level.Food, beverages and tobacco, which has a weight of 13.2% in the CPI basket, saw 3.1% acceleration y-o-y in December 2013 and it rose 0.2% from November same year.The entertainment, recreation and culture group, which carry a weight of 10.90% in the CPI basket, saw its group index shoot up 5.2% compared to December 2013 and it was up 0.1% compared to the previous month’s level.Furniture, textiles and home appliances, which has a weight of 8.2% in the CPI basket, saw its group index surge 4% y-o-y in December last year, while it was down 0.1% from November 2013.Garments and footwear, which carries 5.8% in the CPI basket, saw their price rise 0.9% y-o-y in December 2013 and 0.2% against the previous month’s level.The medical care and medical services group, which has a 2% weight, reported a 2.1% increase y-o-y in December 2013. However, the index was unchanged compared to the previous month’s level.However, miscellaneous goods and services, which carries 7.2% weight in the CPI basket, saw its group become cheaper by 5.4% y-o-y in December 2013. The index fell 0.8% from the previous month.