UNDERSTANDING INFLATION IN AN IMPORT-RELIANT ECONOMY: EVIDENCE FROM SECTORAL CPI

Abstract

An This thesis investigates inflation dynamics within a unique economic structure like Qatar, with particular focus on the food and beverage (F&B) sector from 2012-2023. It addresses how domestic household Consumer Price Index (CPI) is affected by global shocks, market structure, and government policies. Previous studies on inflation have largely emphasized traditional monetarist explanations which often overlook the roles of domestic stakeholders when reacting to a global shock. However, existing studies lacks deeper understanding within the context of Qatar's highly concentrated retail market and strategic economic policies. Employing descriptive trend analysis, comparative time series evaluations, and Spearman's rank correlation, the study uncovers the interactions among domestic and international economic indicators such as nominal and real GDP, import trends, and the Consumer Price Index (CPI) in Qatar, and FAO Food Price Index. The study provides three significant findings. First, Qatar's economy exposure to external shocks due to the volatility of its nominal GDP that is tied to global oil prices. Whereas stable real GDP suggests inflation is driven by prices more than production volume. Second, asymmetric price transmission is found within Qatar's F&B sector pricing dynamics. This is exemplified during 2015 as the FAO Food Price Index dropped by 23.5% while domestic CPI rise by 0.8%. Third, effective governmental approaches significantly mitigate the impact of imported inflation. This price stability is achieved through several key measures mainly through food strategic