GCC Inflation Remains Below Global Average Amid Slowdown

Inflation across the GCC countries continues to stay notably lower than counterparts in the Middle East and worldwide, an analysis done by Kamco Invest, a Riyadh-based investment service provider, showed. Global inflation trends have shown a gradual deceleration in 2023 compared to the previous year, the report said. This shift is primarily driven by factors such as reduced food costs, declining energy prices, and dampened global demand resulting from tighter monetary policies, it added.

The report said that a significant contributor to the global dip in food prices has been the revival of grain exports from Ukrainian ports, following the collapse of the Black Sea Grain Initiative. While inflation rates have experienced a decline over the first seven months of the year, the report underscored that global headline inflation appears to have peaked. According to the report, global core inflation remains notably above the targets set by central banks, signaling ongoing concerns for policymakers. The consumer price index for food and beverages in the GCC countries recorded a nominal change. In Saudi Arabia, the index recorded a year-on-year monthly growth of just 1 % in June whereas Kuwait witnessed a moderate monthly change of 6.3 %.

However, inflation in the GCC countries was felt mainly in the housing sector led by a 9.1 % year-on-year growth in the Kingdom and a 3.2 % year-on-year increase in Kuwait in June. Similarly, the housing prices in Dubai grew by 6.1 % during the same period. In the communication subcategory, the report added, the scene was completely different, as the sub-index decreased for most of the GCC countries, with Saudi Arabia and Qatar recording a decline in communications inflation rate at -0.7 % and -4 % year-on-year during June 2023 respectively. In the education sector, the report added, inflation had also been declining with the costs in Saudi Arabia rising only 0.4 % as compared to 19 % in the same month a year earlier.

As for the UAE, the report stated that the Dubai CPI grew by 1 % during July 2023 as compared to the 5.2 % increase during July 2022, adding that this was the smallest growth witnessed by the Dubai CPI in the last 17 months. Bahrain’s inflation during June 2023, on the other hand, remained stable recording only a marginal uptick of 0.4 % year-on-year. Oman’s consumer prices index, meanwhile, saw a marginal year-on-year rise of 0.6 % in June 2023. The report also stated that Qatar’s inflation increased by 2.5 % year-on-year during June 2023, recording its lowest increase since July 2021.