Bahrain spends 500 million dinars ($1.33 billion) a year on subsidies for food and fuel in an effort to offset inflation, Bahrain's prime minister said.

Gulf Arab states should cooperate to secure food supplies, Bahrain's state news agency quoted Shaikh Khalifa bin Salman Al Khalifa as saying, as prices for fuel and food staples soar.

"The government is striving to provide citizens with basic food products at reasonable prices amid challenges imposed by global inflation," the state BNA news agency quoted Sheikh Khalifa as saying.

"The price hike that swept local markets and the shortage in certain products sounds an alarm not to rely fully on imports to secure our food reserves," the prime minister added.

Inflation in Bahrain's neighbour Saudi Arabia and four other Gulf oil producers will probably rise to at least 9 percent this year as rents and global commodity prices surge and falling interest rates spur lending, a Reuters poll showed last month.

The rise in prices has prompted Bahrain's government to explore plans to set up an import company to stockpile food to ease shortages, and newspapers have carried lists of thousands of citizens eligible for state hand-outs. - Reuters