News
Inflation in Kuwait likely to remain in double digits
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Kuwait's year-on-year inflation will remain in double digits despite some ease in the second half of this year, the National Bank of Kuwait (NBK) said yesterday.
"NBK expects to see year-on-year CPI [Consumer Price Index] rates in the seven to eight per cent range from now to year-end and that would put 2008 inflation at 10 per cent for the year, compared to 5.5 per cent in 2007," NBK said.
"Inflation should ease as a result of slower economic growth, lower commodity prices, months of tighter money" and the dinar's appreciation against the dollar, the bank said.
The currency has appreciated nine per cent since the government dropped the dinar's peg to the US currency in May last year.
Inflation, which rose to double digits for the first time ever in February at 10.14 per cent, dropped slightly in March to 10.1 per cent but continued its upward trend to hit 11.1 per cent in May, the latest available figure.
NBK said housing services (mostly rent) is a bit trickier to interpret near term because rents are surveyed and updated only once per quarter. But the recent cooling-off of real estate suggests that inflation in this sector might ease from its 14.9 per cent (year-on-year) rate in May. Real estate sector makes up 27 per cent of the overall CPI.
NBK said it foresees a slight drop in inflation figures for the rest of the year on the back of falling world food and commodity prices.
The report expected a sharp rise in prices in September during the holy month of Ramadan.
Kuwait, the fourth largest Opec producer, has been striving to combat a steep rise in inflation for the past year. Parliament has held three special sessions to discuss the problem.
The Central Bank of Kuwait (CBK) clamped down on credit and money growth in a bid to drain excess cashflow resulting from high oil revenues.
CBK Governor Sheikh Salem Abdulaziz Al Sabah warned in January that high inflation constituted a "national challenge" for the oil-rich emirate.
The number
10.14%: Rise in inflation in Kuwait for the first time ever in February, which dropped slightly in March to 10.1 per cent but continued its upward trend to hit 11.1 per cent in May
"NBK expects to see year-on-year CPI [Consumer Price Index] rates in the seven to eight per cent range from now to year-end and that would put 2008 inflation at 10 per cent for the year, compared to 5.5 per cent in 2007," NBK said.
"Inflation should ease as a result of slower economic growth, lower commodity prices, months of tighter money" and the dinar's appreciation against the dollar, the bank said.
The currency has appreciated nine per cent since the government dropped the dinar's peg to the US currency in May last year.
Inflation, which rose to double digits for the first time ever in February at 10.14 per cent, dropped slightly in March to 10.1 per cent but continued its upward trend to hit 11.1 per cent in May, the latest available figure.
NBK said housing services (mostly rent) is a bit trickier to interpret near term because rents are surveyed and updated only once per quarter. But the recent cooling-off of real estate suggests that inflation in this sector might ease from its 14.9 per cent (year-on-year) rate in May. Real estate sector makes up 27 per cent of the overall CPI.
NBK said it foresees a slight drop in inflation figures for the rest of the year on the back of falling world food and commodity prices.
The report expected a sharp rise in prices in September during the holy month of Ramadan.
Kuwait, the fourth largest Opec producer, has been striving to combat a steep rise in inflation for the past year. Parliament has held three special sessions to discuss the problem.
The Central Bank of Kuwait (CBK) clamped down on credit and money growth in a bid to drain excess cashflow resulting from high oil revenues.
CBK Governor Sheikh Salem Abdulaziz Al Sabah warned in January that high inflation constituted a "national challenge" for the oil-rich emirate.
The number
10.14%: Rise in inflation in Kuwait for the first time ever in February, which dropped slightly in March to 10.1 per cent but continued its upward trend to hit 11.1 per cent in May