Doha, Qatar: According to a recent report by Fitch Solutions, average inflation in Qatar will witness a decline during the second half of the year by around 3 percent as easing "supply-push" and "demand-pull" factors will result in reducing food prices.
The analysts reports that commodity price is expected to come down by the end of this year as compared to the same period in 2022.
Last month, Qatar welcomed the extension of the Black Sea grain deal for two more months.
On the supply side, “The continuation of the Black Sea grain deal across H2 2023 will also continue to help reduce food prices (13.5 percent of the CPI basket), while lower global energy prices will, in turn, reduce transport costs (14.6 percent of CPI basket),” the report stated.
However, the country expects price-pressures to stabilise on the demand part this year. “Risks to our outlook are mostly to the upside, both from a policy rate and inflation perspective. On the one hand, the Fed may raise its benchmark rate beyond the 25bps core projection. If this were to happen, we believe that the QCB would most likely follow suit,” the report said.
It further added that “On the other hand, headline inflation in Qatar could be slower to ease than our current projections, especially if rental prices accelerate beyond our projects, or if oil prices
remain rebound above our expectations due to the re-opening of the Chinese economy.”
Researchers noted that Qatar Central Bank (QCB) will raise its benchmark policy by 25 basis points this year and will keep the rate on hold for some time. This is followed by a 300 basis points increase in the benchmark rate last year to 5.50 percent, the highest since 2010.
The central banks’ aim to raise a benchmark rate this year is to maintain the currency peg to the US dollar.
During the third edition of the Qatar Economic Forum held last month, QCB Governor HE Sheikh Bandar bin Mohammed bin Saoud Al Thani pointed out that pegging the Qatari riyal to the dollar is “appropriate” in order to maintain a strong stability in financial and economic areas of the country.
