Kuwait’s inflation drops to 2.8% in June, lowest since 2020

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Kuwait’s inflation fell below 3% for the first time in nearly three years with CPI inflation dropping to 2.8% y/y (+0.2% m/m) in June, the slowest pace since November 2020 and from 3.2% in the previous month.

Price rises in the food & beverages sub-component eased to a still-elevated 5.6% down from 6.1% in May, halting a five-month rising trend, said NBK-Economic Research.

Meanwhile, the housing services item, the largest by weight in the CPI basket and composed mainly of rents, saw a notable slowdown to 0.9% y/y compared to 1.4% in May.

Core inflation

Core inflation, which excludes food and housing, edged down to 3.1% from 3.2% in May. The household furnishings, healthcare, education, and restaurants & hotels subcomponents saw higher year-over-year increases but were offset by slower rises in transportation, communication, and recreation subindices, while clothing & footwear and services & miscellaneous goods were unchanged on an annual basis.

So far this year, headline inflation has averaged 3.1% y/y, lower than the average 3.6% rate seen in 2023 and we expect it to maintain the softening trend, averaging 3% in 2024, amid subdued consumer demand.