Qatar’s inflation, based on the consumer price index (CPI), fell 0.30% month-on-month (M-o-M) in July due to the slide in the prices of garments and food items.

The CPI for July was at 106.6 points, which was, however, up 1.90% year-on-year (Y-o-Y) due to costlier food, transportation and garments, according to the Qatar Statistics Authority (QSA).

"July being a summer month, many consumer items are on sale and hence it always shows the seasonal effect of price reductions," a QSA spokesman said.

The garments and footwear group, which carry 5.80% in the CPI basket, saw its price tank 2.60% in July from the previous month even as the group reported an increase of 6.20% Y-o-Y.

Food, beverages and tobacco, which has a weight of 13.20%, fell 0.50% in July from the previous month, while it was up 5.20% Y-o-Y.

The decrease was on account of the decision of the department of consumer protection, that took effect from July 15 in view of Ramadan.

The rent, fuel and energy segment, which is the most influential carrying the maximum weight of 32.20% in the CPI basket, saw its index decline 0.80% M-o-M in July. The index was down 3.60% Y-o-Y.

"After eliminating the effect of rent, the overall index shows a decrease by 0.10% compared with June 2011, and an increase of 4.30% compared to July 2010," the QSA spokesman said.

The Qatar Central Bank had viewed inflation not as an "issue of concern" in the short term mainly because of the excess supply in the real estate market.

Transport and communication, which has a weight of 20.50% in the CPI basket, saw its index gain 0.03% in July from the previous month, but it saw a 6.20% jump Y-o-Y.

Miscellaneous goods and services, with a 7.20% weight, saw its group become costlier by 5.30% Y-o-Y in June. The index was up 0.40% from June 2011.

The medical care and medical services group, which has a 2% weight, reported a 2.50% increase Y-o-Y in July. It was up 0.5% M-o-M. Furniture, textiles and home appliances, which has a weight of 8.20% in the CPI basket, saw its group index rise 0.20% M-o-M, but reported an increase of 2.10% Y-o-Y in June.

Inflation in Qatar is showing an upward trend mainly on robust global commodity prices, a weak dollar and increased government spending, according to the Business Optimism Index, a joint product of the Qatar Financial Centre Authority and Dun & Bradstreet.

Entertainment, recreation and culture, which carries a weight of 10.90% in the CPI basket, saw its group index rise 0.70% M-o-M in July, but reported a 0.50% fall Y-o-Y.