Echoing the trend that is occurring across the GCC, rent and food price rises remain the main drivers of inflation. Rental costs rose by 16 per cent while food costs rose by 9.2 per cent.
A weak US dollar has been blamed as one of the other main factors behind regional inflation, with GCC governments unable to increase interest rates to tackle rising prices as their currencies are pegged to the dollar.
Kuwait ended its peg to the dollar in May 2007, when it began to track a basket of currencies, but the dollar still constitutes a large part of that basket. Since May last year the dinar has only risen about 9 per cent against the dollar.
The Abu Dhabi Chamber of Commerce recently estimated inflation in the UAE was around 14 per cent in 2007, while National Bank of Abu Dhabi put the figure at 10.9 per cent. Inflation in Saudi Arabia rose to 10.5 per cent April, while in Oman it was 11.6 per cent in March. Qatari inflation was 13.7 per cent for 2007.
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.