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Monday, August 2, 2021

QNB report: Falling food prices keeping Qatar’s inflation in check

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A new report says bountiful harvests around the world are pushing down global food prices – good news for consumers in countries such as Qatar, which relies heavily on imports to feed its growing population.

Qatar National Bank said this week that local food prices declined 0.6 percent in June, compared to the same month last year. That’s a turnaround from three years ago, when food prices were on the rise, peaking at a year-over-year increase of 5.9 percent in June 2013, according to QNB.

In theory, declining prices for edibles should help to keep a lid on the cost of living in Qatar, partially offsetting the rapid rise in the cost of rental accommodations.

The QNB report says:

Since the country has virtually no domestic food production, lower international food prices are likely to continue to push Qatar’s food prices lower for the foreseeable future, albeit with a lag. This means that Qatar’s inflation should remain moderate at around 3.5% at least until the end of 2015.

However, two local businesspeople who spoke to Doha News said shoppers likely won’t be seeing any savings at grocery stores just yet.

Local market

A local manager at a chain of grocery stores in Qatar, who asked not to be named, said he hasn’t seen any change in food prices in recent months and has not received any signals from suppliers that a reduction is on the horizon.

“I don’t see any decline here,” he said, suggesting that wholesalers may be seeing a change, but failing to pass the savings on to retailers.

However, one local food importer said prices on their end have also remain unchanged.

Zameel Rahiman, the air shipment manager for Al Safa Distribution – which brings more than 50 tons of strawberries, blueberries, blackberries, cherries, tomatoes and other fresh produce into Qatar weekly – told Doha News that rates are steady.

“Prices are the same. No big fluctuations,” he said.

Rahiman said sales to grocery chains are up as promotional campaigns encourage consumers to eat more fresh fruits, particularly berries. But he said importing food into Qatar costs roughly 20 to 25 percent more than other cities in the region, such as Dubai, where he previously worked, as well as Kuwait City.

One reason, according to Rahiman, is that airlines charge more to fly freight into Qatar than other Gulf destinations. Additionally, he said the new Hamad International Airport is “very busy,” leading to delays in clearing cargo that render some shipments of fresh produce inedible.

“I have to add these losses onto my prices,” Rahiman said.

He added that some suppliers are choosing to fly their shipments into Dubai and then import it to Qatar by truck in an attempt to reach local markets faster.

Rahiman’s concerns echo those of other suppliers, who recently argued that Qatar uses an outdated system of processing and distributing food. One suggestion to help lower prices is for the country to construct large warehouses so importers can purchase large volumes of food directly from countries of origin.

From farm to plate

With its limited fresh water supply and minimal arable land, Qatar currently imports more than 90 percent of its food. Earlier this year, the Gulf Times reported that some 3.98 million tons of food was imported in 2013 – more than double the amount in 2012.

According to a report published by local Northwestern University journalism students, Pakistan is Qatar’s largest supplier of rice and wheat, while the bulk of this country’s (frozen) poultry comes from Brazil.

Most of Qatar’s vegetables and dairy products, meanwhile, are imported from Saudi Arabia. This dependency raised fears among some that this year’s diplomatic spat between Riyadh and Doha could escalate and cause disruptions to Qatar’s food imports.

The government is currently working to improve this country’s food security by purchasing farmland abroad as well as increasing domestic production.

As part of this effort, the Qatar National Food Security Programme aims to have local farms supplying 40 percent of the country’s food by 2024 through more efficient growing techniques and better crop selection.

Thoughts?

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Chipper fluffypants
Chipper fluffypants
6 years ago

I’m confused how a 0.6% food decrease equals a 20% rent increase….

Expat Girl
Expat Girl
6 years ago

I was confused by that as well… just playing with numbers, if a person’s rent was $1000 per month (just for simplicity sake) that person would have to spend $34,000 per month on food in order for them to break even on the food/rent price changes. That means spending 34x more on food than rent!! Now, for the rare binge-eater who lives under a bridge, this may work out alright, but for the rest of us, how on earth can it be said that this is “keeping inflation in check”?!

That is really irresponsible reporting if you ask me, because employers read this and think, hmm.. okay I guess no need for a cost of living adjustment.

AA
AA
6 years ago
Reply to  Expat Girl

I agree…. the org i work for has not adjusted salaries or allowances for the last 6 years!

MIMH
MIMH
6 years ago
Reply to  AA

Why do you stay? (Unless your salary and allowances were huge to start with)

AA
AA
6 years ago
Reply to  MIMH

Trust me…. they were neither huge or anything close to it.. Its one of those things that have no logic…esp when the kids tuition has increased by 30%, rents by 50%, kitchen budget by 70% and yet reports like these come out!! In one instance, a similar report was cited by our HR for not doing anything about it!

MIMH
MIMH
6 years ago
Reply to  AA

Well I’m assuming you are not Qatari so why do you stay if your purchasing power has been eroded so much? Why not try the UAE or go home?

AA
AA
6 years ago
Reply to  MIMH

Well ur right I m not Qatari, and I assuming you are!….me going home or not or my purchasing power is not the issue here….we are discussing misleading info in articles such as these that confuses people and more or less influences incorrect decision making!

MIMH
MIMH
6 years ago
Reply to  AA

No I am not Qatari, but I wouldn’t stay in a place if my purchasing power was eroded that much I would seriously consider going somewhere else, unless the place I was living had other benefits. Is it the beautiful scenery or the exicting driving that keeps you here?

Airwolf
Airwolf
6 years ago
Reply to  MIMH

Despite purchasing power decline qatar is still one of the best places in the world to live. If in reality it was not most guest workers would go home. The problem is poor analysis and assumed fluffiness of such reports which show a grave disdain for the thousands of poor across Qatar who struggle to feed their families. If we don’t speak up to help who will. Reality is it is expensive, things are not as rosy in the real world as report, but this is still a better place to live.

Chilidog
Chilidog
6 years ago
Reply to  Expat Girl

Haha…. “binge eater that lives under a bridge….”

Huzz
Huzz
6 years ago
Reply to  Expat Girl

Perhaps it Qatari spending on food,

Peter Kovessy
6 years ago
Reply to  Expat Girl

Hi there,

Thanks for the feedback, and apologies for any confusion.

I agree that any decline in food prices is unlikely to completely cancel
out the increase in rental rates – as the story notes, it will only
partially offset it. The cost of living will continue to rise – QNB
predicts the inflation rate will hover around 3.5 percent.

We’re already seeing this play out in the Qatar Statistics
Authority’s monthly consumer price index reports. In July, the “rentals,
fuel and energy” category increased 7.6 percent while “food, beverages
and tobacco” declined 0.8 percent. With those categories being two of
the most heavily weighted commodity and service groups, that contributed
to an overall year-over-year increase in the CPI of 3.1 percent.

http://www.qsa.gov.qa/eng/FrequentData/CPI/2014/July/CPI_2014_July_eng.pdf

Peter

Deepak Babu
Deepak Babu
6 years ago

I guess the .6% food decrease will keep inflation down for the locals since they don’t pay any rent in most cases. Other than that, I can’t get my head around that statistic.

Besides I don’t think anything in Qatar works on Demand and Supply basis. It’s all controlled and regulated for the profit of a few shady groups. How else can you justify shocking price differences in goods in neighbouring GCC countries as opposed to Qatar?

MIMH
MIMH
6 years ago

There is no way the small number of food outlets in Qatar will reduce prices, they have a captive market and will charge what they can get away with. Plus I am sure the rents of their premises are continually increasing as well.

fullmoon07
fullmoon07
6 years ago

Hamad International Airport is “very busy, nothing compared to Dubai! Where food items arrive the same day they have been sent.
For sure Doha must have an outdated system for food distribution, sometimes things arrive in bad shape on the shelves.
Great that Government wants to reach to 40% food supplies for the country, but realistically it can only do it up to a certain extent. It can be done with greenhouses, not with rise, cheeses, or meat.

Huzz
Huzz
6 years ago
Reply to  fullmoon07

Have you ever seen how food is taken off the planes at the airport???? I am not surprised that it goes off so quickly with the way it is thrown around.

fullmoon07
fullmoon07
6 years ago
Reply to  Huzz

haven’t seen it and maybe prefer not to see it, but just guessing that plastic bottles of water are left under the sun everywhere. Once I tested the water I drank starting drinking from the tap!

greg
greg
6 years ago

Have you seen the prices of warehouses??

DavidRSS8
DavidRSS8
6 years ago

The story in nonsensical.

The headlines claims falling prices sufficient to keep inflation in check. Yet the quoted store managers say that they haven’t changed prices. This indicates prices are not falling to keep inflation in check in Qatar.

Michael L
Michael L
6 years ago

Although I admire Doha News for many things it consistently demonstrates a very poor understanding of statistics and as a result posts too many misleading or confusing articles.

Smile
Smile
6 years ago
Reply to  Michael L

in the story above “Qatar National Bank said this week that local food prices declined 0.6 percent in June, compared to the same month last year”, this means that dohanews only disseminate information and not responsible for the statistics.

However, dohanews infact put in efforts to interview some people to see if QNB statistics correlate with market prices. “However, two local business people who spoke to Doha News said shoppers likely won’t be seeing any savings at grocery stores just yet”.
I am not trying to defend dohanews but replying according to what i read in the story.

Michael Fryer
Michael Fryer
6 years ago

“He added that some suppliers are choosing to fly their shipments into Dubai and then import it to Qatar by truck in an attempt to reach local markets faster.”

I know nothing about airports and freight handling but I do have to wonder what is wrong with Doha airport if my apples can travel over two borders and 660km by road in less time than if they had landed at Hamad and are taken a few kms up the street.

Is this a teething problem that will be fixed soon?

Airwolf
Airwolf
6 years ago
Reply to  Michael Fryer

Not at all. Qatar airways sets the high monopoly price so your papples will be at a premium as they rest in the massage chair

Jen
Jen
6 years ago

Def no food price drops at the shops–in fact when I do the shopping I notice items up by QR1 or 2 each time!

Airwolf
Airwolf
6 years ago

This is a theoretical decline and has yet to impact my grocery bill. Grocery bills continue to increase. Forget the theoretical and look at the empirical. Lets use the Istanbul marmara schwarma index shall we. In 2005 the shwarma at IM restaurant cost 3 qatari riyal, today the same shwarma costs 7QR. That is a 233% increase in 9 years. Rents have gone up more than food. Petrol which was 0.65QR is today 1.0QR. Bulk of spend is rent and if over a decade that is going up double digit % while some day produce may go down fraction of single digit % the average resident needs their income still to rise double digits to keep up. God bless the 120% and 60% citizens.

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