Qatar's present inflation is mainly imported but government has put in place measures to deal with this "momentary pressure", according to HE the Finance Minister Ali bin Ahmed al-Kuwari.
Qatar Central Bank (QCB) Governor HE Sheikh Bandar bin Mohamed bin Saoud al-Thani affirmed that the central bank has enough tools to contain inflation, while maintaining the peg of its currency to the dollar.
"Everybody will say (maintaining inflation at 4%-5%) is a good job because the advanced economies have been witnessing 8% and above inflation," al-Kuwari told the second Qatar Economic Forum, powered by Bloomberg.
Qatar has been going through deflationary situation for the last two to three years and inflation started from the middle of the last year, slowly growing to 6%, peaked in December month-on-month and the full year was 2.5%, which is again "manageable", he said.
Pent-up demand for services, together with rising food and energy prices, pushed headline inflation to 6.5% year-on-year in December 2021.
Mirroring the global trends, retail inflation in Qatar showed an upward trend in May 2022, both on annualised and monthly basis, according to official data.
The country's cost of living, based on consumer price index inflation, shot up 5.18% year-on-year and 1.34% month-on-month in May 2022, according to figures released by the Planning and Statistics Authority.
The International Monetary Fund projects Qatar's average consumer price index inflation at 3.5% this year and 3.2% in 2023. Strengthening domestic demand and higher energy and food prices are expected to push up inflation to 3.5% (period average) in 2022, it said.
The main driver behind inflation was growth in the entertainment sector, which grew 37%, as the country relaxed the pandemic restrictions, he said.
"Inflation is there, it is imported. But we have made many strategies to weather the momentary pressures," al-Kuwari said.
On the measures to tackle inflation, he highlighted the food security programmes that were implemented a year ago as well as the country's medium term fiscal policy that ensured discipline in spending.
Asked whether the impending Qatar World Cup 2022 would influence the country's general price levels, he said it will "also create pressure on the demand side."
The increase in the country's general price level comes amidst an overall inflationary pressure in the global economy, which prompted the central banks to tighten their monetary policies, stoking fears of economic slowdown.
Qatar's core inflation grew faster than the general CPI inflation both on a yearly and monthly basis respectively in May 2022. The core inflation (excluding housing and utilities) rose 5.21% and 1.53% year-on-year and month-on-month respectively in the review period.
However, al-Kuwari is confident that country's right policies could deal with the current "adhoc" conditions.
Sheikh Bandar said the exchange rate policy served the economy "very effectively," adding that he doesn't expect any changes in the exchange rate policy.
The QCB is working to contain inflation in the country in a direction that is completely in harmony with the US and the measures taken by the US Federal Reserve, expecting an increase in interest rates to contain inflation, according to him.