Kuwait will unveil a new inflation fighting plan next week focusing on food and basic commodities, a government minister said yesterday, as price rises remain near record levels.
Commerce and Industry Minister Ahmad Baqer, who was appointed last week, told state news agency Kuna, the ministry would clamp down on price rigging and increase subsidies for basic commodities affected by a global surge in food costs.
Inflation in Kuwait, the only Gulf Arab state to have abandoned its currency peg to the US dollar, rose to a record 10.14 per cent in February, the last available data, driven by higher food and housing costs.
Baqer said he would present a report to the newly-elected parliament next week with measures to combat inflation.
"There will be a report submitted to parliament within a week," he said, adding that fighting rising prices of foods and basic commodities had priority.
Randa Azar-Khoury, Group Chief Economist of National Bank of Kuwait, said the government might increase food subsidies or introduce rent caps, as in other Gulf states, but it would take time to show an impact.
"They [government] can put caps on prices... they can reintroduce rent controls... the government can also reduce the tariff and customs duties of building materials," she said. "Any measure they take will have an impact but you are not going to see it in May, June or even September... things take time," Azar-Khoury added.
Newspaper Al-Watan said last month that Kuwait's Government had asked a local supermarket chain to report monthly on prices of goods as part of efforts to tame inflation in the oil exporter. In April, Kuwait's minister of finance said the government was not considering introducing caps on rent rises to curb housing costs.
Kuwait increased subsidies on some food items and building materials such as steel and cement to control unjustified price rises, Kuna reported in February.
The commerce minister also said a much-delayed law to create a financial regulator could be passed by parliament by end-2008.
"We hope it will be passed before the end of this year," said Baqer told Reuters.
Prime Minister Sheikh Nasser Al Mohammad al-Sabah had said in March before parliament was dissolved and the election called that he hoped to win approval for the measure by summer. The law is part of plans to attract more foreign investment as Kuwait wants to emulate the success of Gulf neighbours Dubai and Bahrain, which have become financial centres.
Key projects became mired during the last parliament as deputies rowed with the cabinet.