08 May 2008
Central bank governor Sheikh Salem Abdulaziz al-Sabah yesterday warned  that Kuwait was faced with a "national challenge" after inflation reached 9.5 per cent in January. Sheikh Salem called for "coordination in various national economic policies to curb rising inflation", in a statement carried by the official KUNA news agency.

"Inflation constitutes a national challenge and was the result of local and foreign factors," he said. The government Central Statistic Office said last month that the consumer price index in January hit 126.4 points, compared to 115.4 points a year ago, because of a sharp increase in housing services and the price of food. The cost of housing services rose 16.1 per cent in January compared to a year ago, while the price of beverages and tobacco rose 15.1 per cent during the same period.

Medical care and education rose by 12 per cent, household services ten per cent and foodstuffs by 7.7 per cent. The governor said inflation in Kuwait remained at around 1.1 per cent between 2000 and 2004,  jumped to 4.1 per cent in 2005, and to an annual average of 5.5 last year. However, monthly inflation rates began rising rapidly since last July.

Sheikh Salem said that a 6.8 per cent rise in the population last year, mainly due to expatriates, had greatly boosted demand for housing and other services, leading to increased costs. The number of expatriates rose to 2.34 million at the end of last year, compared to a total of just 1.05 million Kuwaiti nationals. Sheikh Salem said monetary policy alone would not be able to contain inflation and other policies must contribute.

© 7Days 2008