Inflation in consumer prices in Kuwait was just a tick higher in October, rising from 3.1 per cent year-on-year (y/y) in September to 3.2 per cent y/y, a report said.

Inflation across most components remained broadly stable; clothing & footwear inflation appears to have gained the most momentum on a month-on-month basis, explained the latest Economic Update from the National Bank of Kuwait (NBK).

Core inflation (which excludes food items) also saw a slight uptick, rising from 2.8 per cent y/y to 2.9 per cent. Food price inflation came in slightly lower against a backdrop of declining global prices. With inflation in most components set to remain in-check until the end of 2015, we expect annual inflation to average close to 3.4 per cent in 2015, before easing to 3 per cent in 2016.

Inflation in local food prices slowed slightly from 4.4 per cent y/y in September to 4.3 per cent in October, as global food prices continued to decline, said NBK.

According to the Commodity Research Bureau’s global commodity index, international food prices fell by around 13 per cent y/y in October. “Given the ongoing weakness in international food inflation, we expect upward pressures on local food inflation to be limited in the near-to-medium term,” the report said.

Inflation in housing services was unchanged from September’s 5.7 per cent y/y reading. Inflation in this segment (a bulk of which is made up of housing rents) witnessed strong gains over the past year, particularly in the fourth quarter of 2014 (4Q14) and 1Q15.

“It appears to have peaked in 2Q15 and we may see it continue to recede over the following months,” the NBK Economic Update said.

Inflation in furnishings & household maintenance continued to ease and clothing & footwear prices remained in decline. Inflation in furnishings & household maintenance came in marginally lower in October, at 2.5 per cent y/y.

Clothing & footwear inflation appears to have bottomed out; nonetheless prices in this segment continued to decline for the seventh consecutive month. Inflation in clothing & footwear costs is seeing a large correction, following a high base around the same period last year. The stronger dinar has helped keep inflationary pressures in this segment down, especially as most items are imported.

Inflation in the ‘other goods & services’ segment also maintained its downward trend in October. Inflation in this segment, which includes prices of personal care products and jewellery and certain business charges, continues to see a downward correction. Given that a bulk of the items in this component is imported, the slowdown can also be explained by the stronger dinar.

Wholesale price inflation eased in the third quarter of this year, mainly as upward inflationary pressures from its manufacturing component subsided. Inflation in the wholesale price index (WPI), updated quarterly, fell from 3.4 per cent y/y in June (its last update) to 2.6 per cent in September, as a slowdown in inflation in manufacturing was offset by inflationary gains in agriculture, livestock & fishing, and mining & quarrying.

The agriculture, livestock & fishing component gained some ground in 3Q15 on the back of a hike in fish & seafood prices during the same period. However, inflation in this segment is forecast to subside in 4Q15 after fish & seafood prices were lowered.

“Inflation in the WPI is forecast to be moderate in the near-to-medium term. This will help keep inflation in the consumer price index in check and lead to an annual average close to our 3.4 per cent forecast in 2015,” said the NBK Economic Update. – TradeArabia News Service