Qatar economy faces rising inflation and widening budget deficit

Qatar's economy faced dual pressures in the first half of 2026, characterized by rising inflation and a widening budget deficit. The national budget deficit reached approximately 31.5 billion riyals during the first six months of the year, with the deficit in the second quarter alone climbing to 21.2 billion riyals.

According to the Planning and Statistics Authority, the Consumer Price Index (CPI) rose by 0.71% month-on-month in July, bringing the annual inflation rate to 3.98% under a newly implemented methodology. This updated approach uses 2024 as the base year and incorporates a revised basket of goods and services to better reflect current household spending patterns.

Price increases were most notable in the entertainment, sports, and culture sector, which saw a 9.15% rise. Other increases were observed in restaurants, accommodation, and health services. Conversely, costs for housing, water, electricity, gas, and fuel decreased by 0.64%. The widening deficit is attributed to fluctuating energy revenues and regional geopolitical tensions affecting supply chains and transport costs.