Key Drivers of Inflation
The primary factor behind this rise was the housing sector, which experienced a significant growth of 5.8%. Other contributing categories included restaurants and hotels, which saw a 2% increase, and culture and entertainment, which posted a 1.7% uptick. The food and beverage sector recorded a modest increase of 1%. However, some categories, such as health, clothing and footwear, tobacco, communications, transportation, and furniture and household equipment, experienced slight declines.
Easing Inflationary Pressures
Despite the uptick in inflation, overall pressures have moderated this year, attributed to the strength of the US dollar, subdued import prices, and ongoing subsidy policies, according to a previous report by Kamco Invest. The International Monetary Fund (IMF) has projected that GCC inflation will average 2.3% in 2024, a decrease from 2.6% in 2023. Inflation rates have largely returned to pre-pandemic levels, following a series of interest rate hikes.
In a recent development, the US Federal Reserve cut interest rates for the first time since 2020 amid signs of slowing inflation, prompting many GCC central banks to follow suit with similar reductions.
