Kuwait’s consumer spending index increased 8.5 per cent year-on-year (y/y) in June, supported by a pickup in the consumption of durables and non-durables, said the National Bank of Kuwait (NBK) in its latest Economic Update.

The end of Ramadan helped boost spending on those components, the bank said in the Update.

Meanwhile, spending on services declined due to an early summer but still maintains robust growth relative to last year. Firmer oil prices, now hovering at three-and-a-half year highs, and improving consumer confidence, which increased at its strongest pace in six years in June, continue to support spending. Momentum may soften due to the summer lull, but is expected to remain robust throughout the rest of 2018, according to NBK.

Spending on durables continued to show strength, recording an increase of 10.8 per cent y/y in June. It was supported by a pick-up in the purchases of electronics and luxury goods, which had more-than-offset some mild softness in automotive and furniture sales.

Growth in the consumption of services was impressive at 11.9 per cent y/y, and non-durables had a good month, growing by 1.3 per cent y/y. With the end of the school year coinciding with the end of Ramadan in mid-June, summer travellers embarked on their vacations earlier than usual.

This may have contributed to a 2.6 per cent m/m drop in the consumption of other services. Meanwhile, higher spending on clothing and cosmetics supported the rebound in non-durables. The 1.2 per cent m/m improvement could have stemmed from purchases usually associated with the celebration of Eid-al-Fitr.

Consumer spending is projected to remain healthy through 2018.However, uncertainty over the future income and employment prospects of expats – following the state’s efforts to increase employment for nationals – may weigh down on consumer spending.

Meanwhile, spending by Kuwaiti nationals is expected to remain strong, thanks to low inflation, healthy employment, and higher public spending, the Update said. – TradeArabia News Service