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Thu 21 Jan 2010 09:02 AM

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Bahrain inflation accelerates to 1.6% YoY in Dec

December consumer price index of the Gulf kingdom rises by 0.45 percent from Nov.

Inflation in Bahrain accelerated to 1.6 percent year-on-year in December, its highest level since September, as food prices increased, but analysts expect only modest price rises this year.

The global financial crisis weighed on consumer prices across the Gulf Arab region last year after they hit record peaks in 2008, with some countries such as the United Arab Emirates experiencing temporary deflation.

Bahrain's annual inflation stood at 1.1 percent in November. It reached a peak of 6.3 percent in July 2008.

The consumer price index of the Gulf island kingdom, a small oil producer, increased by 0.45 percent on a monthly basis in December, after a 0.09 percent rise in the previous month, data from the Central Informatics Organization (CIO) showed on Thursday.

Food and transportation prices rose 0.95 percent and 0.58 percent respectively in December, compared with the previous month, while housing and energy prices remained flat.

Restaurant prices jumped 6.23 percent last month from November, the data showed.

Analysts expect food prices to continue putting pressure on inflation in the Gulf in the coming months, but weak household demand and credit growth as well as a stronger dollar should keep the magnitude of price rises in check.

"Our expectations for all GCC (Gulf Cooperation Council) economies essentially is to have low single digit inflation in 2010," said Giyas Gokkent, chief economist at National Bank of Abu Dhabi.

Average inflation in the non-OPEC member was 2.8 percent for the full year 2009, according to a Reuters calculation, up from analysts' forecast of 2.0 percent. (Reuters)

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