'Inflation data of Gulf states inaccurate' - Emirates24|7

'Inflation data of Gulf states inaccurate'

The GCC Secretariat study says the Gulf countries need to tighten control of the local markets to curb price manipulation (IMAD ALAEDDIN)

Gulf states are providing inaccurate inflation figures because of their heavy subsidies on some goods and services, says an official study.

The six Gulf Co-operation Council countries, which are reeling under record inflation rates, also need to tighten control of the local markets to curb price manipulations that is aggravating inflation, the Riyadh-based GCC Secretariat said in the study, published in the Saudi Al Hayat newspaper.

"Inflation data provided by the GCC countries is not accurate for some reasons, especially the heavy direct and indirect government subsidies on some goods and services and the absence of a real indicator of relative prices as well as family budgets in member states," the study said. "We believe a clearer indicator for real inflation is the per capita income, which has largely receded over the past period."

Most regional states have reported record inflation rates over the past year and cited many reasons for the problem. They include a surge in rents because of strong domestic demand, high food prices, the weak US dollar to which most Gulf currencies are pegged, and an increase in global prices. Within the GCC, inflation levels have largely varied, with the UAE and Qatar reporting double digit rates. The rate in Saudi Arabia was officially put at 4.1 per cent last year while monthly data in Oman and Kuwait indicated the consumer price index is approaching double digit levels. Bahrain had the lowest inflation rate in the region last year as the island nation is far less reliant on volatile oil exports given its small crude reserves of about 150 million barrels, only about 0.1 per cent of the UAE's oil wealth.

"GCC states need to tighten their control on local markets. The absence of control on prices by official organisations in member countries have given retail and wholesale traders an opportunity to manipulate the prices of goods, especially the consumer and basic goods," the GCC Secretariat said.

"The GCC governments should also intensify their efforts to curb inflation as it has started to affect the investment atmosphere in the region. There are indications that some investors are revising their decision to stay in the region while others have already decided to switch to other markets. What is also pushing them to do so is the steady decline in the purchasing power of the GCC currencies and in the real per capita income, mainly of the expatriates."

 

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