Inflation in Saudi Arabia and four other Gulf oil producers will probably soar to at least nine per cent this year as rents and global commodity prices surge and falling interest rates spur lending, a Reuters poll showed.
In dollar-pegged Saudi Arabia and Oman, average inflation may more than double as the weaker US currency makes some imports to the world's biggest oil-exporting region more expensive, according to the poll of 17 economists and analysts.
In Saudi Arabia, average inflation could hit at least a 30-year peak of nine per cent, on average, compared with 4.1 per cent last year, the poll showed.
Year-end inflation in the largest Arab economy could jump to 9.9 per cent, up from 6.5 per cent at the end of December 2007.
Economists have at least doubled their 2008 inflation forecasts for Saudi Arabia, Oman, Bahrain and Kuwait since they were last polled by in December. Oman's average inflation rate will jump to a record 9.3 per cent this year, with inflation touching 11 per cent on December 31, the poll showed.
It also highlighted rapid price growth in Bahrain, the smallest Gulf economy, where inflation should more than double to 8.5 per cent by the end of the year and average 6.1 per cent.
In the UAE and Qatar, inflation will rise slightly in 2008 as housing supply eases pressure on rents in both countries. Inflation in Qatar will still be the region's highest this year, averaging 13.8 per cent, on par with 2007, and easing to 13.3 per cent in the fourth quarter.
UAE inflation accelerated to an at least 20-year peak of 11.4 per cent last year and will rise slightly to 11.8 per cent this year.
Inflation in Kuwait, which has allowed its dinar to rise more than eight per cent since severing its peg on May 20 last year, will soar to an average of 9.3 per cent this year, touching 9.6 per cent in December. (Reuters)