M3 money supply, the broadest measure of all the cash in the economy, rose by 23 per cent in the year to the end of May 2008.

The figures indicate that liquidity in the economy is still growing after April’s M3 growth figure of 20.6 per cent, and that inflation will continue to face upward pressures.

Kuwait has attempted to slow inflation through a number of measures, including pegging the dinar to a basket of currencies rather than the dollar, and putting tighter regulations on bank lending. However, private sector lending rose nearly 30 per cent in the same period.