The average annual rate of Kuwait's headline inflation jumped to 2.9 percent in 2014, compared with only 2.7 percent in 2013, a specialized economic report showed Wednesday.
"(Kuwait's) inflation remained between 2.7 percent and 3.0 percent throughout most of 2014, with headline inflation logging in an annual average of 2.9 percent; just a tad higher than the nine-year low of 2.7 percent posted in 2013," reads the report issued by the National Bank of Kuwait (NBK).
The report noted that the inflation in the consumer price index (CPI) eased in December; core inflation saw an uptick.
"Core inflation was led higher by a pickup in housing inflation. Headline inflation eased as the rise in housing inflation was offset by a slowdown in the CPI's other major components, food inflation in particular. Food inflation softened in December, in-line with international food prices. The stronger dinar against currencies other than the US dollar also kept overall inflation in check," added the report.
It disclosed that the inflation slowed from 3.1 percent year-on-year (y/y) in November to 3.0 percent y/y in December. Core inflation came in higher during the same period, rising from 3.0 percent y/y to 3.2 percent y/y. The data showed that the inflation in housing services climbed from 4.4 percent y/y in November to 5.0 percent y/y in December, driving core inflation higher. Inflation in this sector is only updated and reported once every quarter, with the latest figure covering price movements during the final quarter of 2014. The higher inflation rate could be attributed to continued healthy demand levels in the sector towards the end of 2014.
Inflation in the food price index slid from 3.3 percent y/y in November to 2.6 percent y/y in December, in-line with weaker global food inflation. "Local food inflation is set to ease further in the near-to medium-term on further softening in international food inflation. This should help limit upward pressures on the headline inflation rate in the coming months," the NBK projected.
Inflation in the clothing and footwear and furnishings and household maintenance maintained their downward trend in December. It clarified that price growth in the clothing & footwear segment witnessed a slight contraction of 0.2 percent y/y in December, following the 1.1 percent y/y rise in the previous month. Furnishings and household maintenance inflation slowed further, from 4.4 percent y/y in November to 3.5 percent y/y in December.
"Inflation in the 'other goods and services' component continued to recover in December. Inflation in this component, which includes prices of personal care products and jewelry and certain business charges, jumped from 1.0 percent y/y in November to 2.0 percent y/y in December," it said.
Inflation in the 'restaurants & hotels' component also moved higher, with inflation rising from 3.5 percent y/y in November to 4.0 percent y/y in December.
"Changes in inflation in this segment, like inflation in housing services, are apparently reported once every quarter. The December jump, 3.5 percent m/m, in inflation in this segment is typical of year-end, when many restaurants and hotels revise their prices. Although price changes are much tamer than the other 11 months of the year, firm December or Q4 prices indicate good demand in the sector," it pointed out.