Money-supply growth in Bahrain, an indicator of future inflation, slowed for the first time in six months in December to 34.8 per cent, central bank data showed on Monday.

M3, the broadest measure of money circulating in the Bahraini economy, rose to BD6.6 billion ($17.56 billion) at the end of December, compared with BD4.89 billion a year earlier, the central bank said in a statement on its Web site.

M3 growth accelerated at its fastest pace in at least six years in each of the five previous months.

The central bank's net foreign assets rose 52.2 per cent to 1.55 billion dinars, the data showed.

Money-supply growth, driven by oil prices at near-record highs, is fuelling inflation across the world's top oil-exporting region.

Gulf Arab central bank have been forced to track US interest rate cuts to deter bets on the appreciation of their dollar-pegged currencies, constraining their efforts to combat rising prices.

Inflation in Bahrain fell to 4.07 per cent in December after accelerating the month before when housing and food prices surged.

The government said in January it was looking into ways to ease the impact on citizens from a rise in the cost of living.

The country's central bank raised the reserve requirement for banks by two percentage points to 7 percent last month to prevent lower borrowing costs from fuelling inflation.-Reuters