(MENAFN - Arab Times) In this week's online poll conducted by Arab Times on inflation in Kuwait, a majority of respondents, about 48 percent, said inflation has affected housing rents the most in the state.
Forty one percent felt that food prices have witnessed the steepest rises. This view of the second biggest majority of voters is corroborated by local online economic reports that said that soaring global food prices have driven Kuwait's inflation rates up.
Food is an important contributor of Kuwait's Consumer Price Index (CPI) based inflation, showing that the rise in Kuwait's overall inflation is mainly driven by higher food prices.
In a report by a local bank released earlier in the year the CPI firmed slightly to 3.1 per cent y/y in July from 2.8 per cent in June almost exclusively due to a sharp increase in food prices.
However, on housing rents the report said that inflationary pressures remain fairly subdued. The housing services subcomponent, mostly residential rents, failed to register an increase for the seventh month in a row, keeping the inflation rate at just 1.5 per cent y/y as of July.
Other economic sources said the rise in Kuwait's food prices is in line with the soaring global food prices. Kuwait imports most of its food items, approximately 90 percent, for domestic consumption which leads to imported food price pressure.
The rising global food prices pass through local value chains in Kuwait and this leads to high inflation. Food and beverage producers are now looking to push higher commodity prices up the value chain where ultimately the cost will be borne by the consumer.
Respondents that Arab Times spoke to felt that housing rents have been increasing at about 10 percent every two years. Most people complained that the apartment caretakers are taking advantage of the growing demand for flats and increased the rents at will with total disregard for the contracts.
Some tenants attributed the housing rent inflation to the demolition of old buildings in the city that is leaving many on the hunt for new apartments. The rents in Riggai, Abbasiya and Khaitan have witnessed sharp increases in the recent past.
The withholding power of landlords is also working against the interests of tenants, says an expatriate. "The landlords are not hard pressed for cash to repay the banks as they enjoy a lot of leeway both from the banks and the government. This gives them the bargaining power, and they are willing to wait until they find someone offering the rent they demand."
Others blamed that the sluggishness in the commercial realty market is being made up through residential rents by landlords, as the demand for houses is always high.
The damp private sector is the main cause for the lack of demand in office space, and it has turned into a windfall for businesses, who feel lucky to be able to hire offices for the current rates.
However, a small percent of voters, 3 percent, felt that inflation has affected the commercial rents the most in Kuwait, while 5 percent felt that inflation in general was within bearable limits and that it's not yet time to ring the alarm bells.
Two percent of the voters felt that inflation doesn't really matter.