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Producer Price Index (Q1 2010-Q1 2011)

The second most highly weighted category in the CPI is transport and communications, representing 21% of the overall index. Prices changes in this category have been more moderate, only rising at a rate of 4.3% in 2005-08 and contracting at a rate of 1% in 2009-10.

Percent change, index weighting in brackets

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The PPI is closely related to oil prices. The highest weight in the PPI basket is given to mining, which accounts for 77% of the index (Figure 2). Within this, crude oil prices account for 50%, natural gas for 32% and condensates 18%. Inflation in this category has been 29% from the first quarter of 2010 to the first quarter of 2011. As natural gas and condensate prices are often linked to oil prices, this category will be closely correlated with QNB Capital’s oil price forecast, rising by around 35% in 2011 and falling by around 4.8% in 2012.

Manufacturing Manufacturing is the next most heavily weighted category, representing 21% of the index. Inflation has risen by 14% in this category from the first quarter of 2010 to the first quarter of 2011, which has mainly been driven by an 18% increase in the price of refined petroleum products and a 11% increase in the price of basic chemicals, used in the petrochemical industry. As the inputs for petroleum products and petrochemicals are oil and gas based, this category is also closely correlated with oil prices.

16

February 2012

(100%)

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The food, beverages and tobacco component of CPI was also an important factor driving inflation. QNB Capital expects rising prices in the food, beverages and tobacco and transport and communications categories to more than counteract the falling prices in the rent, fuel and energy category. During the first six months of 2011, prices in the food, beverages and tobacco category rose again, at an annual average rate of 4.8% in line with fresh increases in international food prices because of poor harvests.

Producer Price Index (PPI)

(77%)

30

15

10

28.6%

24.9%

(21%)

13.9%

5

(2%) 0.1%

0 Overall index

Mining

Manufacturing

Electricity and water

Source: QSA and QNB Capital analysis Figure 2 The remaining 2% of the index is made up of electricity and water. Prices in this category are fixed by the government, and are therefore likely to remain relatively stable. They fell marginally by 0.1% from the first quarter of 2010 to the first quarter of 2011.

Wages Based on labour surveys conducted by the Qatar Statistics Authority QSA, average wages have increased from USD 17,200 per year in 2006 to USD 25,700 in 2009. This equates to an annual increase of around 14% and is broadly in line with CPI. In September 2011 the government announced a 60% increase in salaries of military officers and a 50% rise in the salaries of military personnel of other ranks.

Top paid sectors in Qatar Sector

Average Annual Salary (USD)

Mining and Quarrying

55,279

Public Administration

50,093

Electricity, gas and water supply

49,098

Financial intermediation

49,055

Source: QSA and QNB Capital analysis

Private Sector Qatar - Feb2012  

English version - February 2012

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