KUWAIT: Inflation in the consumer price index (CPI) continued to slow in January while core inflation remained steady. The ease in headline inflation came on the back of a slowdown in most of the CPI’s components, especially food. Food inflation slid further in January, as international food inflation continued to decelerate.
The relatively strong dinar against major currencies with the exception of the US dollar has also helped keep the overall inflation rate at ease of late. Inflation slowed from3.0 percent year-on-year (y/y) in December 2014 to 2.8 percent y/y in January 2015.
Core inflation was stable at 3.2 percent y/y. Against a projected backdrop of moderate inflation across most of the CPI’s components, overall inflation is expected to firm up slightly in 2015 to average around 3-3.5 percent.
Inflation in the food price index slid from 2.6 percent y/y in December 2014 to 1.4 percent y/y in January 2015, as global food inflation saw a decline. With international food inflation expected to remain weak in the near to medium-term, upward inflationary pressures on local food inflation will remain limited in the coming months. This should help keep the overall inflation rate in check. Inflation in housing services was unchanged at5.0 percent y/y in January.Inflation in this component is only updated and reported once every quarter.
The next update is due in March. Inflation in this sector is expected to gradually edge higher on healthy demand levels. We may see core inflation continue to rise gradually as a result. Inflation in the clothing & footwear segment witnessed a small rebound whilst inflation in furnishings & household maintenance steadied. Clothing & footwear prices rose by a mere 0.3 percent y/y in January; furnishings & household maintenance inflation was steady at 3.5 percent y/y during the same period
Inflation in the ‘other goods and services’ maintained its upward trend in January. Inflation in this component, which includes prices of personal care products and jewelry and certain business charges, was a tick higher in January 2015, rising from 2.0 percent y/y in December to 2.1 percent y/y.
