Kuwait inflation slows to 25-month low of 2.8%
Source: BI-ME with Reuters , Author: Posted by BI-ME staff
Posted: Thu June 28, 2012 11:42 am

KUWAIT. Kuwait's annual inflation rate eased to 2.8% in May and prices edged down slightly from the previous month, mainly because of cheaper food, state news agency KUNA reported.

KUWAIT. Kuwait's annual inflation rate eased to a 25-month low of 2.8% in May and prices edged down slightly from the previous month, mainly because of cheaper food, state news agency KUNA reported on Wednesday.

Inflation in the major oil exporter has been slowing gradually. It hit 3.3% in April, down from a peak of 5.4% in May 2011.

Consumer prices fell 0.1% month-on-month in May, compared to a 0.6% drop in April, KUNA said, citing data from the Central Statistics Office.

"The low inflation reading is testament to a weak demand climate and anaemic credit growth," Liz Martins, senior regional economist at HSBC in Dubai, told Reuters.

"Even with the salary hikes we have seen in recent months, we don't expect a major pick-up in the short- to medium term."

Around 3,000 Kuwaiti customs workers went on a week-long strike for higher pay in March, disrupting port traffic, while employees at national carrier Kuwait Airways grounded planes for three days during a walkout. The civil service commission eventually agreed to wage rises of 25%-30% for public sector employees, and proposed increases of up to 330 dinars (US$1,190) per month for Kuwaiti private sector workers.

Paul Gamble, head of research at Jadwa Investment in Riyadh, told Reuters there was very little inflationary pressure coming from abroad, while consumer and government spending were not increasing that much.

"In general, the political uncertainty has hindered project implementation, which has kept a lid on one aspect of inflation," he said.

Project spending in Kuwait has been slowed by political instability, which has seen eight governments come and go in just six years. On Tuesday, thousands of Kuwaitis protested against a court ruling that effectively dissolved a parliament dominated by opposition Islamists.

"June will be potentially sluggish but then we have Ramadan coming up, so we will obviously see the usual Ramadan impact on food prices," Gamble said.

Food prices normally rise during the Muslim holy month of Ramadan, which begins in late July, as families enjoy elaborate evening meals after a daylight fast.

In May, food costs, which account for almost a fifth of Kuwait consumer expenses, fell 1.3% month-on-month, after a 2.6% plunge in April. Transport prices edged up 0.1 percent from the previous month, KUNA said.

Analysts polled by Reuters in March predicted average inflation in Kuwait of 4.5% in 2012, down from a three-year high of 4.8% last year.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: November 25, 2014
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
date:Posted: November 25, 2014
BAHRAIN. The "increasingly deregulated and competitive economic environment is facilitating rapid growth in business development within the private sector."
date:Posted: November 25, 2014
INTERNATIONAL. Participants in the global oil market are eagerly awaiting the Opec meeting on November 27, which could potentially set the tone and the direction of oil prices.
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
dhgate