Food price inflation eases in Qatar after leap due to sanctions

Workers stand next to food items in a shopping mall in Doha, Qatar, June 8, 2017. REUTERS/Stringer

DUBAI (Reuters) - Food price inflation eased in Qatar during August, government data showed on Saturday, suggesting the country was finding ways to reduce the impact of economic sanctions imposed by other Arab states.

Food prices jumped after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Doha on June 5, closing Qatar’s land border with Saudi Arabia - across which many perishable goods had been imported - and disrupting maritime shipping routes.

Food and beverage prices climbed 4.5 percent from a year earlier in July, their fastest increase since at least 2014, and shot up 4.2 percent from the previous month.

In August, however, food and beverage prices only rose 2.8 percent from a year ago and fell back 0.6 percent from July, suggesting Qatar had succeeded in establishing new channels to obtain food economically.

Qatari shipping lines, which lost the use of Dubai as a trans-shipment center because of the sanctions, have been establishing new services via Oman, Kuwait and the Indian subcontinent. Qatari food processors have boosted their operations to make up for the disruption to imports.

Saturday’s data showed the sanctions were still having a major impact on Qatar’s real estate market, however, by hurting business sentiment and prompting some investors from other Arab states to offer their properties for sale.

Housing and utility prices sank 4.0 percent from a year earlier in August, their biggest drop for at least several years, and fell 0.4 percent from the previous month. In July, they had slipped 3.6 percent from a year ago.

Qatar’s overall consumer price index dropped 0.4 percent from a year earlier in August, its first fall since at least early 2015, when the current data series began.

Reporting by Andrew Torchia; editing by David Clarke