The general inflation rate in the GCC region increased by 1.5 percent year-on-year by the end of September 2024, according to consumer price data issued by the GCC Statistical Center. In an earlier report, the center expected inflation rates in the GCC countries to stabilize at 2.4, 2.6, and 2.1 percent during the period of 2024 – 2026.
Consumer price inflation rate in the GCC countries in 2023 reached about 2.2 percent, down from 3.1 percent in 2022. Several factors continue to support the decline in inflation across the region including improvements in supply chains, the decline in crude oil prices, the decrease in global food prices, and the rise of the U.S. dollar against major currencies, with GCC currencies being pegged to the U.S. dollar.
Kuwait records highest inflation rate
Among GCC countries, Kuwait recorded the highest annual inflation rate in September at 2.8 percent, followed by Saudi Arabia at 1.7 percent, Qatar at 0.8 percent, and Bahrain and Oman at 0.4 percent each.
The GCC Statistical Center attributed the increase in inflation to the rise in housing prices, which recorded a significant increase of 5.7 percent. Additionally, the culture and entertainment category saw a rise of 2.6 percent, followed by goods and services at 1.8 percent, restaurants and hotels at 1.5 percent, and food and beverages, as well as education, at 1.0 percent each.
In contrast, prices decreased in the transportation category by 3 percent, furniture and household equipment by 2.3 percent, tobacco by 1.2 percent, communications by 0.9 percent, and clothing and footwear by 0.8 percent, while health prices remained unchanged.
The monetary policy in the United States also plays a key role in curbing inflation across the region since GCC central banks tend to mirror the Federal Reserve’s rate policies aimed at decreasing inflation to the 2 percent target.
Read: How economic growth, rise of AI fuel dynamic labor market in UAE
Inflation’s outlook
The global economy is turning the corner as growth remains resilient and inflation continues to decline. With robust growth in trade, improvements in real incomes and a more accommodative monetary policy in many economies, the OECD’s Outlook projects global growth persevering at 3.2 percent in 2024 and 2025, after recording 3.1 percent in 2023.
In the GCC region, the GCC Statistical Center expects economic growth of 3.7 percent in 2024. Growth is expected to continue at a higher pace in 2025 to reach 4.5 percent and then stabilize at a rate of 3.5 percent in 2026.
Global inflation will likely decline back to central bank targets in most G20 economies by the end of 2025. Headline inflation in the G20 economies will likely ease to 5.4 percent in 2024 and 3.3 percent in 2025, down from 6.1 percent in 2023, with core inflation in the G20 advanced economies easing to 2.7 percent in 2024 and 2.1 percent in 2025.
