Qatar’s inflation, based on the consumer price index (CPI), hit a near two-year high of 2.1% year-on-year (y-o-y) as food, garments, transportation and gold jewellery became dearer, according to the country’s statistics body.

The CPI for August 2011 was at 108.91 points, up a marginal 0.2% month-on-month (m-o-m) despite the government imposed freeze on many items in view of Ramadan, according to figures released by the Qatar Statistics Authority (QSA) yesterday.

However, economists view that there could be a moderate rise in inflationary pressures in the coming months especially in view of September hike of 60-120% in the salaries for the local staff in government and public sector organisations.

Garments and footwear, which account for 5.8% of the CPI basket, saw their price spurt 3.5% in August from the previous month and it reported an increase of 7.6% y-o-y.

Miscellaneous goods and services, which carry 7.2% weight, saw the group become costlier by 7.7% y-o-y in August. Its index was higher by 2.6% from July 2011. The m-o-m rise in the index of miscellaneous goods and services is mainly “attributed to the rise in the price of gold jewellery”, said a QSA spokesman. The transport and communication sector, with a weight of 20.5% in the CPI basket, witnessed its index gain 0.8% in August from the previous month and it saw a 6.7% jump y-o-y.

The furniture, textiles and home appliances pool, which has a weight of 8.2% in the CPI basket, saw its group index rise 0.1% m-o-m in August and reported an increase of 1.9% y-o-y.

"The increases were partly offset by drop in the index of food, beverages and tobacco, as a result of the decision taken by the Department of Consumer Protection to reduce prices during Ramadan," the spokesman said.

The food, beverages and tobacco group, which constitutes 13.2% of the CPI basket, fell 1.8% in August from the previous month; while it was up 3.4% y-o-y.

The rent, fuel and energy group, which is the most influential and carry the maximum weight of 32.2% in the CPI basket, saw its index decline 0.5% m-o-m in August. The index was down 3.6% y-o-y.

"After eliminating effect of rent, the overall index shows a decrease by 0.4% compared with July 2011, and an increase of 4.4% compared to August 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 current excess supply in real estate.

However, Business Optimism Index, a joint product of Qatar Financial Centre Authority and Dun & Bradstreet, said inflation in Qatar was showing an upward trend mainly on robust global commodity prices and increased government spending.

Medical Care and Medical Services group, which has 2% weight, reported a 2.5% increase y-o-y in August. It was unchanged from the previous month. Entertainment, Recreation and Culture, which carry a weight of 10.9% in the CPI basket, saw its group index unchanged m-o-m in August but fell 0.4% y-o-y.