Slower housing and transport price growth, coupled with falling food prices, cut Qatar’s CPI inflation to a nine-month low of 2.7% y/y in December 2014 from 3.0% y/y a month earlier, data from the statistics office showed on January 15. Falling commodities charges will help the government’s efforts to curb price growth in H1 2015 amid strong private consumption and unprecedented public spending that had been fuelling inflationary pressures last year.

In monthly terms, the CPI dropped 0.3% in December compared with zero m/m growth a month earlier.

Housing prices (32.2% of the basket) stagnated m/m in December, reducing the annual growth to a still high 7.3% from 7.6% y/y the previous month. Strong expatriate demand for residential housing, however, continues to boost the housing index.

Expatriate demand will rise further in H1 2015 amid supply bottlenecks for residential units and expansionary public spending in construction and infrastructure.

Food, tobacco and beverage prices (with a 13.2% weight in the index) shrank 0.4% m/m and 0.4% y/y in December, reversing a 0.1% y/y rise the month before.

Favourable seasonal factors that cut mainly fresh produce prices continue to keep food costs in Qatar anchored.

Transport and communication prices (20.5% of CPI) dropped 0.5% m/m on lower crude oil prices and subsidies, cutting the annual increase to 1.2% from 1.5% y/y in November.