Gulf inflation showed signs of moderating after months of rapid rises drove it to record levels, but pressures from elevated food and housing costs threaten to plague the region for years.

Kuwait's red hot inflation cooled slightly in May while Bahrain price rises steadied, new data showed, one day after money supply figures from Saudi Arabia, the Gulf's biggest economy, indicated that price pressures may wane.

Inflation has been a source of stress in the Gulf, where most states rely heavily on migrant labour.

In Kuwait, hundreds of Bangladeshis went on strike this week seeking better pay, while workers have protested in the UAE and Bahrain over wages lost to the tumbling dollar.

Inflation in Saudi Arabia, Kuwait and three other states began accelerating in the second half of last year, soaring above 10 per cent in all states in the first half of the year.

Headline inflation rates would likely begin to level off on Gulf government measures to control rent rises, new housing supply and lower global food price increases, analysts said.

"Inflation cannot continue to go up at such a rapid pace," said Jadwa Investment research head Paul Gamble.

"Increases in food and commodity prices have slowed down now. But the worst isn't over. It's going to take a number of years for it to go down significantly."

Gulf governments have increased price controls, boosted subsidies and cut import duties on some goods to cool down prices, while also raising employee wages.

In Saudi Arabia, inflation more than doubled in the seven months to April to 10.5pc - the highest level since at least the oil boom of the 1970s. Between 2000 and 2005, inflation was less than 1pc in the kingdom.

Saudi inflation eased slightly to 10.4pc in May, and price rises are likely come off in the second half of the year, the Saudi central bank governor has said.

Echoing those comments, Oman's deputy central bank chief said this month inflation probably hit a peak at a record 13.2 per cent in May.

Growth in money supply, an indicator of future inflation, is beginning to ease after Gulf central banks tightened lending curbs this year.