Rising housing and transport costs fuelled Qatar's CPI inflation to 3.4% y/y in May from 2.8% y/y the month before, the statistics office said on June 12. Subdued food prices and falling other goods and services charges, however, continue to keep the CPI index in the low single digits compared with the record 15% price growth recorded in 2008.

In monthly terms, the CPI rose 0.5% m/m in May, speeding up from a 0.2% monthly rise in April.

Excluding rents, fuel and energy prices, the CPI inflation also accelerated to 2.1% y/y in May from 1.6% y/y the previous month on a 0.5% m/m growth.

Rising inflationary pressures are defined as the main risk facing Qatar’s medium-term outlook amid unprecedented public spending and the consequent surging local and expat demand which is mainly fuelling rent costs. The central bank is aggressively taping the domestic debt market seeking to soak up excess liquidity that is likewise fuelling inflationary pressures.

Housing prices (32.2% of the basket) rose 0.6% m/m in May amid higher rents and expatriates demand, sending the annual growth to 7.0% y/y from 6.3% y/y in April.

Food, tobacco and beverage prices (with a 13.2% weight in the index) fell 0.4% m/m in May on favourable seasonal factors. The annual growth, thus, stagnated at 0.0% compared with 0.6% y/y increase in April.

Clothing and footwear prices grew 0.2% m/m in May, trimming the annual rise to 3.9% y/y from 4.0% a month earlier.

Transport and communication prices (20% of CPI) rose 1.6% m/m in May in a probably one-off hike, lifting the annual increase to 2.6% y/y from 1.2% y/y in April.

Other goods and services prices shrank 0.6% y/y in May, narrowing from a 1.8% yearly deflation the previous month.