The latest data from Bahrain’s Central Informatics Organisation shows that although prices fell 0.27 per cent during May, they were up 3.5 per cent compared to May 2008.

The rise in year-on-year inflation reverses a previous decline. Inflation fell from 4.7 per cent in February to 3.1 per cent in April.

Signs of deflation remain though, with food and non-alcoholic beverages falling by 1.5 per cent during May, compared to April.

The UK’s Standard Chartered Bank expects Bahrain’s economic growth to be 2 per cent in 2009, far lower than the 6.8 per cent in 2008.