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Dubai: Kuwaiti inflation accelerated to a record 11.4 per cent in April as a stronger dinar failed to slow increases in the cost of rents and food.
The inflation rate rose from 10.2 per cent in March as housing costs increased an annual 14.9 per cent and food rose 11.9 per cent, the government said. Both March and April figures were released yesterday.
Kuwait, the only Gulf state to have dropped its currency's peg to the dollar, now has the third-highest inflation rate in the Gulf, behind Qatar and Oman. Accelerating inflation in Kuwait strengthens the argument of the other Gulf states that price increases have been stoked by housing shortages and global food prices, not monetary policy.
"The price of certain foods peaked around that time globally, which has pushed up food prices in Kuwait," Giyas Gokkent, head of research at National Bank of Abu Dhabi, the emirate's largest lender by market value, said. "Inflation may come down in the following months as food prices moderated globally."
Rough rice futures peaked at $22.43 per 100 pounds on April 23, and were trading at $17.51 at 12.36pm in London. Wheat futures have fallen 37 per cent since March 12.
Currency pegs
Pegging currencies to the dollar has forced Gulf states to cut interest rates in line with the US even as inflation rates rise. Kuwait has allowed the dinar to appreciate 8 per cent since the peg was dropped a year ago and has chosen not to follow the last two interest rate cuts by the Federal Reserve.
Kuwaiti money supply fell month-on-month for the first time in six months in June, suggesting that government efforts to slow loan growth have been successful.
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