Food prices a challenge in Bahrain

Bahrain's inflation is expected to cool slightly in the next 12 months, but food prices remain a challenge, its central bank governor said.

"That is a major concern for us in Bahrain and it is a wild card because we have seen such an increase in food prices in such a short period of time in a very strange way," Rasheed Al Maraj told the Meed magazine.

Bahrain should rein in state spending as part of plans to curb inflation, Maraj told Reuters last week.

Al Maraj vowed to tackle the domestic issues that have pushed inflation to 5.24 per cent in March as food prices and rents soared. "If you look at the component of the CPI for every country in the region… you will see many of them, such as rent and services, are local factors," Al Maraj said.

"With the new supply of houses and apartments in Bahrain, this could moderate, and hopefully will reduce the negative impact rent has on the CPI. We can see the end of it."

Bahrain's economy is expected to grow by six per cent to seven per cent in 2008, A Maraj said.