Money supply in Kuwait, an indicator of future inflation, rose in August at the second-fastest pace this year as quasi money grew.
M3, the broadest measure of money circulating in the economy, rose 18.9% to 17.88 billion dinars ($63.63 billion) on Aug 31, compared with 15.04 billion dinars a year-earlier, according to data on the central bank Web site.
M3 in July surged at the fastest pace since 1994, two months after the oil exporter dropped its currency peg to the dollar in a bid to curtail inflation.
“Because money supply growth is still in the double digits, this continues to indicate strong inflationary pressures,” said Giyas Gokkent, head of economic research at National Bank of Abu Dhabi.
Quasi-money, which includes savings, time deposits and foreign currency deposits of resident sectors except the government, jumped 21.1% in August, the data showed.
Annual inflation in the Middle East’s fourth-largest oil exporter topped 5% for three consecutive months to the end of May, before easing in June for the first time in eight months, to 4.36%.
M3 in August fell 0.6% compared with July. M3 in July surged 22.5% year-on-year as quasi money expanded by 24.5%.
Kuwait’s central bank had blamed rising inflation on the dinar’s peg to the dollar, saying the US currency’s slide against the euro this year was raising import costs. The US currency hit a record low against the 13-nation European currency last week.
The oil producer dropped the peg in May and started tracking a basket of currencies, including the dollar. It has since allowed the dinar to gain 2.9% on the dollar.
Still, growth in housing prices accelerated to 7.1 percent in June, compared with 5.6% in May, signalling price pressures could still be building in Kuwait.
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