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Tue 12 Oct 2010 12:38 AM

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Kuwait August inflation climbs to 15 month high

Food prices, which account for 18% of Kuwaiti basket, soared by 1.2% month on month in August

Kuwait August inflation climbs to 15 month high
INFLATION ACCELERATION: Kuwait inflation climbed to a 15 month high of 4.4% year on year in August. (ITP Images)

Kuwait inflation climbed to a 15 month high of 4.4 percent year on year in August, mainly driven by a rise in food prices, data showed on Monday.

Inflation in the world's fourth largest oil exporter has been accelerating this year as the oil reliant economy recovers from last year's sharp contraction.

Consumer price growth stood at 4.0 percent on an annual basis in July, still well below a record high of 11.6 percent in August 2008.

On the month, prices in the OPEC member rose 0.4 percent following a 0.6 percent increase in the previous month, data from the Central Statistical Office showed.

Central bank governors from Kuwait and Saudi Arabia voiced their concerns last month about rising inflationary pressures stemming from factors they cannot directly influence such as food costs.

Kuwait, unlike its fellow Gulf oil producers, abandoned the dollar peg in favour of a currency basket in 2007 to rein in a sharp spike in inflation.

Food prices, which account for 18 percent of the Kuwaiti basket, soared by 1.2 percent month on month in August, following a 3.1 percent jump in the previous month.

Prices usually rise during the holy month of Ramadan, which began in mid August, as families enjoy larger and more elaborate evening meals after the daylight fasting.

Housing prices, which have the largest weight of 27 percent, were unchanged in August, following a 0.1 percent dip in July. Transport costs, the third biggest component, were flat.

A Reuters poll forecast inflation in Kuwait at 4.2 percent for the full year of 2010, up from 4.0 percent last year. The central bank said last month it expected inflation to edge up to 4.5 percent towards the end of 2010. (Reuters)

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