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INFLATION IN GCC COUNTRIES Group A
WHAT IS INFLATION?• An increase in the price of goods over time• With the same of money you will have less purchasing power• Unemployment as inflation e.g. 1 gallon of milk=$5 Inflation rate =10%/yr New price next year=$5.5
CAUSES OF INFLATION
1. Unemployment is at natural rate which depends on GDP at full-employment level.
2. This AD so when production at full capacity prices are increased causing inflation.
3. Can be caused from consumption, investment or government spending
4. taxes also spending which AD
• A shift in aggregate demand to the right
2. COST PUSH INFLATION
Possible factors:1. wages2. Import prices3. Raw Material Prices4. Profit Push Inflation5. Productivity6. Taxes
• A shift in aggregate supply to the left
Rising house prices• Rising house prices indirectly cause inflation by encouraging people to buy
and invest in real state. This causes growth in the economy and leads to demand pull inflation. AD (Aggregate demand) exceeds AS (aggregate supply) causing inflation. Printing more money
• Creating revenue by printing money is called Seigniorage• money supply leads to inflation• Reduces purchasing power • Too much money supply my cause hyperinflation• In a recession it is possible to increase money supply without increasing
inflation.
INFLATION RATE IN GCC 2014•The range of inflation rates for GCC in 2014 was 0.8%-3.1%.
Annual Inflation rate
(%)
Countries
3.1 United Arab Emirates
3.04 Kuwait 2.7 Qatar2.5 Bahrain2.4 Saudi Arabia
0.08 Oman
Inflation increase from
November and
December (%)
Countries
0.34 United Arab Emirates
0.97 Kuwait 0.3 Qatar0.2 Bahrain0.1 Saudi Arabia0.08 Oman
INFLATION RATE IN GCC 2014 CONTD..
Annual Inflation
rate of food prices (%)
Countries
1.33 United Arab Emirates
2.57 Kuwait 0.4 Qatar2.6 Bahrain2.6 Saudi Arabia0.22 Oman
Annual Inflation rate of
housing and utility prices
(%)
Countries
5.39 United Arab Emirates
5.03 Kuwait 7.3 Qatar6.1 Bahrain2.5 Saudi Arabia0.38 Oman
Annual Inflation rate of
transport prices (%)
Countries
1.82 United Arab Emirates
1.54 Kuwait 1.2 Qatar0.5 Bahrain1.5 Saudi Arabia
0.31 Oman
INFLATION RATE IN GCC 2013•The range of inflation rates for GCC in 2014 was 1.1%-3.5%.•Base year of 2007 for comparison
Consumer Price Index increase for
2013 (points)
Countries
118.1 United Arab Emirates
129.2 Kuwait 114.4 Qatar114.8 Bahrain126.7 Saudi Arabia129.9 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index for food and
drinks in 2013
(points)
Countries
140.1 United Arab Emirates
141.9 Kuwait 136.9 Qatar137.5 Bahrain140.5 Saudi Arabia137 Oman
Price Increase for
food and drinks in 2013 (%)
Countries
2.7 United Arab Emirates
4.0 Kuwait 2.3 Qatar2.3 Bahrain5.7 Saudi Arabia2.8 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison
Consumer Price Index for tobacco
in 2013 (points)
Countries
144.3 United Arab Emirates
132.6 Kuwait 128.7 Qatar140.5 Bahrain153.1 Saudi Arabia126.5 Oman
Price Increase for tobacco in 2013 (%)
Countries
14.2 United Arab Emirates
7.1 Kuwait 0.6 Qatar5.5 Bahrain8.4 Saudi Arabia1.5 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for clothes and
shoes in 2013
(points)
Countries
109.2 United Arab Emirates
126.8 Kuwait 116.6 Qatar109.6 Bahrain104.8 Saudi Arabia112.3 Oman
Price Increase for clothes and
shoes in 2013 (%)
Countries
0.3 United Arab Emirates
-0.2 Kuwait 0.2 Qatar0.8 Bahrain1.5 Saudi Arabia1.8 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for
housing ,water, electricity and fuel in
2013 (points)
Countries
108.2 United Arab Emirates
127.7 Kuwait 89.5 Qatar95.8 Bahrain153.8 Saudi Arabia135.2 Oman
Annual inflation for housing ,water, electricity
and fuel in 2013 (%)
Countries
0.3 United Arab Emirates
3.9 Kuwait 5.9 Qatar8.7 Bahrain3.4 Saudi Arabia0.5 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for
furniture and
household goods in
2013 (points)
Countries
126.9 United Arab Emirates
131.9 Kuwait 122.4 Qatar137.5 Bahrain122.6 Saudi Arabia128.1 Oman
Price Increase for
furniture and
household goods in 2013 (%)
Countries
0.9 United Arab Emirates
3.2 Kuwait 3.1 Qatar7.1 Bahrain4.3 Saudi Arabia2.2 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for medical care
in 2013 (points)
Countries
107.3 United Arab Emirates
126.8 Kuwait 116.9 Qatar106.2 Bahrain109 Saudi Arabia
113.8 Oman
Price Increase for medical care in 2013 (%)
Countries
0.4 United Arab Emirates
1.2 Kuwait 2.3 Qatar0.3 Bahrain3.2 Saudi Arabia1.5 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for transportation costs in
2013 (points)
Countries
120.2 United Arab Emirates
122.6 Kuwait 127.9 Qatar107.5 Bahrain111 Saudi Arabia
116.5 Oman
Annual inflation for transportation costs in 2013 (%)
Countries
1.0 United Arab Emirates
1.2 Kuwait 1.6 Qatar0.8 Bahrain2.5 Saudi Arabia0.5 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase
for communication services in 2013
(points)
Countries
98.2 United Arab Emirates
101.3 Kuwait 85.4 Qatar87.2 Bahrain93.8 Saudi Arabia80.1 Oman
Price Increase for communication services in 2013 (%)
Countries
No change United Arab Emirates
-0.1 Kuwait 0.2 Qatar1.5 Bahrain1.8 Saudi Arabia-2.3 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for recreation and culture
in 2013 (points)
Countries
115.6 United Arab Emirates
128.1 Kuwait 101.6 Qatar136.4 Bahrain106.3 Saudi Arabia108.7 Oman
Price Increase for recreation and culture in 2013 (%)
Countries
0.9 United Arab Emirates
1.9 Kuwait 4.5 Qatar0.6 Bahrain1.7 Saudi Arabia-1.1 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for education in
2013 (points)
Countries
147.1 United Arab Emirates
124.3 Kuwait 149.4 Qatar121.4 Bahrain112.6 Saudi Arabia152.5 Oman
Price Increase for education in
2013 (%)
Countries
5.4 United Arab Emirates
0.8 Kuwait 8.6 Qatar4.5 Bahrain2.2 Saudi Arabia4.2 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for restaurants
and hotels in 2013
(points)
Countries
139.9 United Arab Emirates
126.6 Kuwait 114.2 Qatar107.8 Bahrain126.8 Saudi Arabia134.1 Oman
Price Increase for restaurants
and hotels in 2013 (%)
Countries
1.9 United Arab Emirates
0.6 Kuwait -0.1 Qatar0.6 Bahrain4.2 Saudi Arabia1.1 Oman
INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.
Consumer Price Index increase for
miscellaneous goods and services in
2013 (points)
Countries
23.6 United Arab Emirates
28.7 Kuwait 55.6 Qatar37.6 Bahrain17.6 Saudi Arabia77.4 Oman
Price Increase for miscellaneo
us goods and services in 2013 (%)
Countries
-0.2 United Arab Emirates
2.2 Kuwait -4.4 Qatar3.5 Bahrain-0.2 Saudi Arabia0.3 Oman
CONCLUSION•Inflation rose during 2013 and 2014 due to the population increasing which increased demand for all products.•Low unemployment and tax increases spending which creates growth in the economy.•Similar inflation rates among GCC since there is a lot of export and import of goods among them.•As long as oil price is high their economies will continue to grow with increasing inflation.