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Wed 10 Oct 2007 12:49 PM

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Kuwait inflation rises to almost 5%

Inflation in the Gulf Arab state rises in July on higher costs for housing and transport, data shows.

Annual inflation in Kuwait rose to 4.98% in July from 4.36% in June on higher costs for housing and transport, government data showed on Wednesday.

But inflation remained below the levels of above 5% seen for three consecutive months to the end of May, according to the data obtained by Reuters.

The All Items Consumer Price Index was 118 points at the end of July, compared with 112.4 points a year earlier.

Amongst the biggest rises in July were housing costs, which rose 7.14%, almost unchanged compared with June. Transport and communications costs climbed 9.7% in July, the data showed.

By contrast, food price-rises eased to 2.1% from 2.3% in June.

The government of the Middle East's fourth-biggest oil producer said last week it would clamp down on price gougers after lawmakers, worried about inflation, demanded action.

The Gulf Arab state also has said it will investigate a jump in housing and land prices, and make them more affordable for citizens.

In July, money supply, an indicator of future inflation, grew at its fastest pace in 13 years.

Inflation across the Gulf Arab oil producers, which are reaping a windfall from record oil prices, surged to at least a five-year high last year, paced by Qatar's 11.9%, according to central bank and HSBC Holdings data.

That has raised pressure, especially on Kuwait and the UAE, where inflation last year grew to at least an 18-year high, to revalue their currencies.

Kuwait, which pays for about a third of its imports in euros, has allowed its currency to rise 3.17% since May 19, the day before it dropped its peg to the weakening dollar and adopted a basket of currencies.

-Reuters