Inflation in GCC countries edited

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


0.97 Kuwait 0.3 Qatar0.2 Bahrain0.1 Saudi Arabia0.08 Oman

INFLATION RATE IN GCC 2014 CONTD..

Annual Inflation

rate of food prices (%)

Countries



Annual Inflation rate of

housing and utility prices

(%)

Countries



Annual Inflation rate of

transport prices (%)

Countries


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



INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison.

Consumer Price Index for food and

drinks in 2013

(points)

Countries


141.9 Kuwait 136.9 Qatar137.5 Bahrain140.5 Saudi Arabia137 Oman

Price Increase for

food and drinks in 2013 (%)

Countries



INFLATION RATE IN GCC 2013 CONTD..•Base year 2007 for comparison

Consumer Price Index for tobacco

in 2013 (points)

Countries



Price Increase for tobacco in 2013 (%)

Countries




Consumer Price Index increase for clothes and

shoes in 2013

(points)

Countries



Price Increase for clothes and

shoes in 2013 (%)

Countries


-0.2 Kuwait 0.2 Qatar0.8 Bahrain1.5 Saudi Arabia1.8 Oman



housing ,water, electricity and fuel in

2013 (points)

Countries



Annual inflation for housing ,water, electricity

and fuel in 2013 (%)

Countries





furniture and

household goods in

2013 (points)

Countries



Price Increase for

furniture and

household goods in 2013 (%)

Countries




Consumer Price Index increase for medical care

in 2013 (points)

Countries


126.8 Kuwait 116.9 Qatar106.2 Bahrain109 Saudi Arabia

113.8 Oman

Price Increase for medical care in 2013 (%)

Countries




Consumer Price Index increase for transportation costs in

2013 (points)

Countries


122.6 Kuwait 127.9 Qatar107.5 Bahrain111 Saudi Arabia

116.5 Oman

Annual inflation for transportation costs in 2013 (%)

Countries




Consumer Price Index increase

for communication services in 2013

(points)

Countries



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


Consumer Price Index increase for recreation and culture

in 2013 (points)

Countries



Price Increase for recreation and culture in 2013 (%)

Countries


1.9 Kuwait 4.5 Qatar0.6 Bahrain1.7 Saudi Arabia-1.1 Oman


Consumer Price Index increase for education in

2013 (points)

Countries



Price Increase for education in

2013 (%)

Countries




Consumer Price Index increase for restaurants

and hotels in 2013

(points)

Countries



Price Increase for restaurants

and hotels in 2013 (%)

Countries


0.6 Kuwait -0.1 Qatar0.6 Bahrain4.2 Saudi Arabia1.1 Oman



miscellaneous goods and services in

2013 (points)

Countries



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.

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Inflation in GCC countries edited