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Sat 4 Aug 2012 10:34 AM

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Kuwait inflation forecast at 3-4% in H2

KFH-Research rules out return to record high levels; says population to grow by 5.4%

Kuwait inflation forecast at 3-4% in H2
Ramadan is likely to push up food prices in Kuwait in the short term, says KFH-Research.

Kuwait's inflation rate is expected to remain low at between three and four percent in the second half of 2012, Kuwait Finance House's research unit has said in a new report.

KFH-Research said it ruled out a return to the record high rates of eight percent prior to the global economic crisis of 2008.

The report also forecast total population in Kuwait would increase by 5.4 percent to 3.9 million in 2012 and 5.1 percent to 4.1 million in 2013.

The report showed that the rate in the Gulf state remained stable for the second consecutive month in June at 2.8 percent year-on-year.

It said rental rates remained unchanged, while inflation rate increased on a monthly basis due to increase in prices of food due to high demand prior to Ramadan.

The overall inflation rose to 0.2 percent in June as food prices soared in Juneby 4.9 percent as households built up their stocks for the holy month which started last month.

"Ramadan is likely to push up food prices and increase inflationary pressures across the GCC in the coming months," the report said.

"Despite the government efforts to control prices, the cost of food is expected to increase during Ramadan as demand surges for staple items such as rice, bread and sugar," it added.

"We are ruling out a return of the record inflation rates seen in Kuwait before the financial crisis. Government interventions including food price subsidies and controls may contribute to downward movements in food prices," KFH-Research said.

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