PHOTO
KUWAIT: Inflation in consumer prices eased for the third consecutive month in December as price growth in most major components was steady. Headline inflation slowed to 3.0 percent year-on-year (y/y) from 3.1 percent in November; core inflation (which excludes food items) also eased in December, slowing to 2.6 percent y/y from 2.8 percent y/y in November. Annual inflation averaged at 3.3 percent in 2015, higher than the 2.9 percent reading in 2014, mainly due to stronger gains in housing inflation.
Inflation in local food prices edged up slightly in December even as global food prices continued to fall. Food prices were up by 4.6 percent y/y compared to 4.3 percent y/y in November. Meanwhile, international food prices were down by 8.4 percent y/y in December according to the Commodity Research Bureau's global commodity index. With global food prices poised to continue to decline in the near-to-medium term, gains in local food inflation are expected to be limited.
Inflation in housing services edged up in December after easing in recent months. Housing service prices, which primarily reflect housing rent, grew by 6.0 percent y/y in the final quarter of 2015, up from 5.7 percent in September. Inflation in this segment made some strong gains in 2015, though it has eased from its level in the middle of the year.
Inflation in furnishings & household maintained its downward trend in December and clothing & footwear prices continued to fall, but at a lower rate. Inflation in furnishings & household maintenance eased from 2.7 percent y/y in November to 2.4 percent y/y in December. Clothing & footwear prices continued to decline for the ninth consecutive month. The stronger dinar continues to drag costs lower in this segment.
Inflation in the 'other goods & services' segment also continued to trend lower in December. Inflation in this segment, which largely includes imported items including personal care products and jewelry, has also been led lower by the stronger dinar.
Other segments worth noting: inflation in education rose from 2.7 percent y/y in November to 3.5 percent y/y in December, amid higher tuition costs. Inflation in the restaurants & hotels segment slowed considerably in December to 3.1 percent y/y, from 7.0 percent in November as catering service costs and prices at restaurants and cafes came in lower.
Inflation in wholesale prices eased in the final quarter of 2015, on the back of softer gains in manufacturing, and agriculture, livestock & fishing prices. Wholesale price inflation eased to 2.2 percent y/y. Inflation in wholesale food costs also subsided in the 4Q15, mainly as a stronger dinar weighed down on imported food costs. Average growth in wholesale prices was up in 2015, rising to 3.0 percent from the 2.5 percent reading in 2014. The main source of this rise was the manufacturing sector.
NBK Economic Report
© Kuwait Times 2016
