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 20, 2014
INTERNATIONAL. The trajectory of Japan's economy has much to teach us about the wisdom of Keynesian policies. Those who are not blinded by left-wing dogma should take a good look at where the road of permanent stimulus ultimately leads.
date:Posted: November 20, 2014
INTERNATIONAL. The path to the acceptance of the participatory approach to development was forged, through trial and error, over several decades until the 1990s, when its global recognition by development practitioners became well-established.
date:Posted: November 20, 2014
INTERNATIONAL. There is a high degree of uncertainty over how the Iranian negotiations and the OPEC meeting will play out, but the end of November will be hugely important for energy markets.
INTERNATIONAL. Both countries posted freedom scores of 8.1, according to the annual Economic Freedom of the Arab World report published by the Fraser Institute. Bahrain dropped from first place last year to third place and a score of 8.0 in this year's report, which is based on 2012 data, the most recent available.
dhgate