(MENAFN) An economic report expected Kuwait's inflation to rise to up to four percent in the first half of 2012, driven by massive government spending, Arabian Business reported.
The report explained that the direct governmental increases in salaries will boost inflation levels in the oil-rich Gulf state, as liquidity and demand rise.
Inflation, however, is likely to slow to 3 - 3.5 percent in the second half, as the government expands the subsidy umbrella to control higher inflation in the future, the report expected.
Oil-related subsidies could contribute to the reduction of transportation and electricity costs, thus the prices of goods and services in Kuwait, the report added.
Inflation rates increased in February to reach 3.8 percent as a result of the increase in prices of most consumption items, especially food.
The report said that the increase in Kuwait's overall inflation follows the trend of its neighboring GCC countries where increases were also driven largely by higher prices of food and beverages.
In March, the Kuwait government announced a large rise in public sector wages while encouraging reduction on food prices.