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Tue 19 Feb 2008 05:31 PM

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Kuwait increases food subsidies

Bolstered round of subsidies come as 'unjustified and man-made increase in prices' spiral out of control.

Kuwait has increased subsidies on some food items and building materials such as steel and cement in an effort to curb an "unjustified" rise in prices, the state news agency reported, citing Kuwait's deputy prime minister.

Annual inflation in Kuwait, the world's seventh-largest oil exporter, hit a record 7.3% in October, as housing prices jumped 12.6% and food costs rose 6.08%.

Kuwait's cabinet approved measures to raise subsidies on "basic food stuffs and building materials such as steel and cement," KUNA reported, citing Faisal Al-Hajji, who is also the minister of state for cabinet affairs.

It gave no further details in a statement on Monday.

"The government has adopted all necessary measures to curb the unjustified and man-made increase in prices in the country," KUNA said.

Kuwait broke ranks with its Gulf Arab partners in May dropping its peg to the declining dollar in a bid to control inflation that it partly blamed on more expensive imports.

The currency has since risen almost 6%.

Unable to raise interest rates because of their dollar pegs, most Gulf states are resorting to subsidies and price controls to cushion their populations from rising prices. (Reuters)

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