A strong US dollar, subdued import prices, and continued subsidy policies have kept inflation rates low in the GCC region over H1 2024.
Despite ongoing geopolitical instability, the consumer price index (CPI) in the GCC hovered around 3.0% year-on-year, as noted by Kamco Investment in a recent research report.
Oman reported the lowest year-on-year inflation growth among the six GCC countries, with a rate of 0.9% in May 2024, down from 0.4% in April 2024, and further decreased to 0.7% in June 2024.
In contrast, Dubai reported 3.8% year-on-year inflation growth in May 2024, slightly down from 3.9% in April 2024. Kuwait reported a 3.2% inflation rate in May 2024. Other GCC countries reported inflation rates below 2.5% (Saudi Arabia at 1.6%, Bahrain at 2.5%, and Qatar at 0.9%). Saudi Arabia’s inflation rate for June 2024 showed a 1.5% year-on-year increase.
Globally, inflation is declining faster than expected. The IMF projects the global inflation rate to drop to 5.8% in 2024, down from 6.8% in 2023. The US saw a 3.0% year-on-year CPI increase in June 2024, while the Eurozone’s inflation rate grew by 2.5% year-on-year in the same month.
The IMF has cautioned that inflation in major economies is decreasing slower than anticipated, complicating monetary policy normalization. It forecasts GCC inflation to average 2.2% in 2024 and 2.1% in 2025.
