Inflation in consumer prices retreated slightly to 2.9 percent year-on-year (y/y) last August, the National Bank of Kuwait (NBK) said in a report on Monday.
The pace remains near 3.0 percent, the average of the last three months, and of the first eight months of the year, it added. The small dip in August was mainly due to a decline in food prices. Food inflation slid into negative territory in August as global food prices remained in decline, the NBK said.
However, core inflation (excluding food costs) edged higher, from 3.5 percent y/y in July to 3.7 percent y/y in August as inflation in furnishings and household maintenance, clothing and footwear and 'other goods and services' gathered some momentum.
The report expects CPI numbers to firm up in September when the report incorporates the recent increase in gasoline. As a result, an annual average inflation rate of 3.4 percent in 2016 is projected, a tick higher than the 3.3 percent reading in 2015.
Local food prices slipped into deflationary territory in August as global food prices continued to decline. Local food inflation declined in August, albeit marginally, by -0.2 percent y/y.
According to the Commodity Research Bureau, international commodity food prices fell by -3.2 percent y/y in August. The tepid growth in local food prices is in turn being echoed in the non-durable goods inflation data, which has been trending lower since the beginning of this year.
Prices in the transportation sector fell for the eighth straight month in August. Transportation costs fell by 1.9 percent y/y, unchanged from June's reading, the report said.
Inflation in this sector has been trending lower since at least 2009 mainly due to softer growth in both car prices and airfares. However, inflationary pressures in this segment may rise in the short to medium-term as transport services readjust their prices/fares to reflect the fuel price hike that was imposed this September.
The Kuwaiti government reduced petrol subsidies in September in a bid to curb public spending amid dwindling oil revenues. This led to prices at the petrol pump soaring by 62.2 percent on average, the NBK said.