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Posted On: 17 September 2008 10:16 am
Updated On: 12 November 2020 02:08 pm

Inflation rate hits 16.59pc

Khalifa Al Haroon
Khalifa Al Haroon
Your friendly neighborhood Qatari
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The country's inflation rate surged to 16.59 percent in the second quarter, up from 14.75 percent in the first quarter, on the back of high housing and food costs. However, it is not totally a gloom and doom scenario as inflation is expected to level off this quarter. Marios Maratheftis, Standard Chartered Regional Head of Research, Middle East, North Africa and Pakistan (Global Markets), told The Peninsula yesterday: "There is very little that can be done in the absence of a monetary policy. I was expecting an increase this year and now have seen the increase." Maratheftis said the two main drivers of inflation here are the costs of housing and food. "One cannot avoid spending on these two essentials and so that causes problems. But the inflation rate will start levelling off as the global prices for food are going down. Oil prices have also come down. The inflation rate is relatively high because of monetary conditions and interest rates are very low." There has been much talk of de-pegging from the US dollar as an instant solution to regional inflation woes. Kuwait has linked its dinar to a basket of currencies with moderate success. Maratheftis said: "De-pegging is a solution. If it happens, it should happen now. It would be helpful to have an independent policy and not be pegged to the dollar." H E Sheikh Abdullah bin Saud Al Thani, Qatar Central Bank Governor, said in Jeddah yesterday in the run-up to today's meeting of GCC central bank governors: "We have succeeded in resisting calls to reform our currencies' peg to the dollar or changing the exchange rate from the level where it was fixed." He said the resistance meant central banks in the region were better off now. Maratheftis expressed concern the inflation rate in Qatar was well into double digits. "It is closer to 20 percent than it is to 10 percent. Even with an ideal economic policy, it will take about a year to bring inflation under control," he said. Inflationary concerns have led the government here to take unprecedented steps, such as freezing the costs of certain construction material and capping rents. The high cost of living due to increases in rents is a reason many have sent their families home. It is also a worry for those looking to take up employment in Qatar. However, Qatar continues to be one of the fastest-growing economies globally, with predictions of growth starting at 15 percent or close to it. This is in sharp contrast to global trends where countries like Japan are facing economic shrinkage. The Pen The Peninsula and Gulf Times BOTH mentioned this but there has been no reports or releases by the Central Bank. Nor has the National Statistics Authority released any new numbers. The last numbers were from Q1 March. Someone making up stuff now? There's no doubt that inflation is affecting us, I just wish they'd be a bit more accurate.