With inflation taking an upward trend in Kuwait since 2017, and increasing it significantly, especially over the past two years, the question worthy of mention is if salary increases have kept pace with the inflation.
According to the statistics issued by the Central Administration of Statistics, the consumer prices recorded an increase of 8.2 percent between September 2017 and September 2021, or from 112.8 points to 122.1 points, while the increase reached more than 10 percent between September 2017 and last February.
On an annual basis, inflation increased by 0.27 percent from September 2017 to September 2018 (from 112.8 to 113.1 points), bringing the consumer price index up during the following year until September 2018 by 1.68% to 115 points.
Inflation began to make great strides in 2020, coinciding with the Corona crisis, a major disruption in global supply chains and a rise in food prices, as the consumer price index rose in September of the same year to 117.3 points, or about 2% compared to the same month of 2019, before doubling Inflation growth to about 4.09 percent during September 2021, when it jumped to 122.1 points.
Although the world began to catch its breath economically in 2022 and gradually recover from the effects of “Corona”, the Russian invasion of Ukraine had a severe impact, as it led to unprecedented rises in energy prices, and the repercussions of the war pushed the price index of basic food commodities in the world to record levels. According to the Food and Agriculture Organization of the United Nations (FAO), inflation in Kuwait jumped last February to the highest level in 10 years, recording 4.37 percent on an annual basis especially food and education.
While inflation reduces real incomes by reducing the purchasing power of money, salary increases reduce the impact of income inflation, if they do not prevent a decline in the standard of living, especially for middle- and limited-income people who constitute the largest segment in Kuwait.
According to labor market data recently issued by the Central Administration of Statistics, the average salaries of citizens increased by 6.04 percent between 2017 and 2021, while the salaries of expatriates witnessed a greater rate of increase by about 13.7 percent, noting that the salaries of Kuwaitis exceed the incomes of expatriates in terms of value.
The data indicated that the average salary of a Kuwaiti employee increased by the equivalent of 85 dinars during 5 years, reaching in September 2021 to 1490 dinars, compared to 1405 dinars during the same period in 2017.
As for the average salary of expatriates, it witnessed an increase of 13.7 percent, with a value of 40 dinars during the last 5 years. The average salary of an expatriate in Kuwait at the end of September 2021 amounted to 331 dinars, compared to 291 dinars during the same period in 2017.
While salary increases may not have kept pace with the rise in inflation over the past 5 years, the biggest impact of the increase in commodity prices will be on retirees.
It is noteworthy that the World Bank expected the inflation level in Kuwait to rise from 3.4 percent in 2021 to 3.6 percent in 2022, making Kuwait the second Gulf country in the rise in the inflation rate after Qatar, which is likely to record 4 percent.
It should be noted that Kuwait recorded the highest inflation rate in the Gulf region in 2021, according to estimates by the World Bank, followed by Saudi Arabia and Oman.
According to the latest “Statistics” figures, the biggest rise in inflation was in the first group “food and beverages”, whose prices increased during last February by 7.3 percent compared to the same period in 2021, while 17 percent of Kuwait’s total imports fall into this category, according to the statistics.
The second largest increase in inflation was in the education group, with 18.95 percent, then “clothing” with 5.54 percent, last February on an annual basis, then in the ninth group, “entertainment and culture” by 3.91 percent, then the “miscellaneous goods and services” group with 3.61 percent.