Bahrain's inflation climbed to a four-month high of 1.6 per cent on an annual basis in February as consumer prices jumped from the previous month fuelled by soaring food and transport costs, data from the Central Informatics Organisation showed.

The non-Opec oil producer has been hit by its worst public unrest since 1990s, starting in February. Bahrain has introduced martial law and security forces cracked down on protesters last week.

Bahrain’s economy is seen growing 3.4 per cent in 2011, lower than previously expected due to public unrest, after an estimated 4.0 per cent in 2010.

Bahrain central bank governor Rasheed Al Maraj said in March there had been no adverse impact from the protests that have gripped the kingdom now for nearly a month.

Giyas Gokkent, chief economist, National Bank of Abu Dhabi, said: "The expectation across the GCC is for the global food price trends to also feed through to inflation. The figure you see for February is therefore consistent. The CPI should continue to trend upwards."    

"One of the things that has happened after the turmoil is that governments have either given direct one-time allowances to households, that happened in the case of Bahrain, or they have engaged in various types of higher spending."    

"We think that these increased expenditures or increased handouts may culminate in some demand-pull inflation."     – Reuters