Bahrain inflation steady at 3.1% in June

HOLDING STEADY: Bahrain inflation was steady at 3.1% in June. (Getty Images)

Annual inflation in Bahrain was steady at 3.1 percent in June, while month-on-month consumer prices rose 0.95 percent on higher housing costs, government data showed on Tuesday.

Rising global food prices and soaring rents have spurred price rises across the Gulf, the world's top oil-exporting region, where economies are booming on a more than six-fold rise in oil prices since 2002.

Price rises in Bahrain, the smallest Gulf economy, are the slowest in the region. Annual inflation has crossed 10 percent in Saudi Arabia, Qatar, the United Arab Emirates, Oman and Kuwait this year.

"The annual inflation rate amounted to 3.1 percent," the Central Informatics Organization (CIO) said in a statement, without giving details of how it calculated the rate.

The CIO said in January it had revised the consumer price index and was using 2006 as the base year. It has yet to release new weightings for previous years.

Annual inflation "amounted to 3.1 percent for the first five months of the current year", it added.

The month-on-month rise in inflation - the highest this year - was due to a 1.5 percent in housing and utility costs, the data showed. Bahrain's consumer price index rose to 106.5 points on June 30 compared with 105.5 points at the end of May.

"The housing, water, electricity, gas and other fuels group has seen a rise in prices due to the rising price of home maintenance material prices," the CIO said.

Food prices eased for a second month in Bahrain in June, falling 6 percent from May, the data showed.

Like most of its Gulf neighbours, Bahrain pegs its currency to the weak dollar, driving up import costs. Analysts polled by Reuters in May said they expect Bahrain inflation to average 6.1 percent this year.

In response to rising prices, Bahrain said in June it would spend $1.3 billion a year on subsidies for food and fuel to offset the impact of inflation on its population.

Bahrain's central bank has also raised the reserve requirement for banks by two percentage points to 7 percent in January to prevent lower borrowing costs from stoking inflation further.

Bahraini money supply, an indicator of future inflation, grew at its slowest pace in eight months in May, but still surged 32.2 percent. (Reuters)

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