By Andy Sambidge
KFH-Research report says drops in housing costs and utility bills have driven decline
Kuwait's inflation rate fell to a three-and-a-half year low in March, with drops in housing costs and utilities driving the decline, KFH-Research has said in a new report.
It said inflation in the Gulf state fell to 1.6 percent in March from 2.1 percent the previous month, adding that it expected the rate to remain between 3-4 percent for the second half of 2013.
The report did not rule out the possibility that the Central Bank of Kuwait might decrease interest rates during the coming months to encourage bank loans, in return for the current increase in personal and commercial loans.
Kuwait's inflation rate during Q1 averaged at two percent, down from 2.3 percent in the previous quarter as food price inflation eased, the report said.
"In view of the lower inflation registered in Q1, we revise our full-year average inflation forecast lower to 2.5 percent for 2013 from earlier projections of 3.5 percent," KFH-Research added.
"We however maintain our 2014 inflation forecast of 3.5 percent as we expect the current period of decelerating inflationary pressures is likely to be transient before tighter global food supply and continued strong rental demand are expected to assert inflationary pressures by towards the end of 2013."
The report said inflation will still remain at a "manageable level" of 3-4 percent in H2 2013 and 2014 as the government's price control measures on fuel and food items through an extensive subsidy system will likely prevent a drastic rise in inflation for Kuwait.
Drops in housing costs???? Where? Kuwait? Its either this is a joke or KFH research need to redo their studies. Rent is rising, and prices on all comodoties keep increasing. Only 5 years ago necessities cost 1/3 what they cost now. What is more ridiculous is that the salary ranges are either the same or less, especially for expats.