Kuwait's Inflation hits decade high (Bilingual)

Executive Summary

Kuwait's inflation has climbed quickly over time in the past two years and has now become one of the highest inflation among GCC countries. The consumer price index of Kuwait has increased to 4.3% (y/y) in December 2021, which is the highest since October 2011. The key factors driving Kuwait's inflation high are price rise in Food & Beverages and Education. The Food & Beverages prices increased 7.2% (y/y) as of December 2021 on the back of increasing international food prices and supply chain disruptions. Housing services prices in Kuwait increased from being flat to positive as demand for real estate increased from the relaxation of Covid restrictions.

Kuwait's inflation is dependent on two major components Food & Beverage and Housing Services as their combined weightage is more than 50% of CPI. In the present situation, food inflation plays a major role in driving inflation. The price increase is attributable to several global issues that have an impact on the supply chain, including weak global production and supply, high land and sea transportation costs, partial employment, and unemployment. Considering the above and the geopolitical factors, inflation could be sticky.

Key Discussion Points

• Kuwait Inflation has increased to 4.3% (y/y) in December 2021, the highest in the decade.
• The key factors driving the Kuwait's inflation high are price rise in Food & Beverages and Education.
• Food Prices are being pushed by international factors and the core inflation excluding food & beverages edged by 3.7% (y/y) in December 2021.
• The price increase is attributable to several global issues that have an impact on the supply chain, including weak global production and supply, high land and sea transportation costs, partial employment, and unemployment. Considering the above and the geopolitical factors, the inflation could be sticky.

Did you know?

• Housing Services has the highest weightage of 33.2% in CPI.
• The Food & Beverage price shot up to a peak of 11.5% (y/y) in June 2021 and continues to grow at 7.2% (y/y) as of December 2021.
• Food price increase is one of the major factors that drove inflation high in Kuwait, both in the present and the past.

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