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MENAFN - Kuwait News Agency (KUNA) - 06/10/2012

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(MENAFN - Kuwait News Agency (KUNA)) The inflation in the Consumer Price Index (CPI) slowed to 2.8 percent y/y in August, from 3.1 percent in July, a specialized economic report showed Friday.

"This was due to subdued inflation rates across most segments. Core inflation, which excludes food and beverage prices from the index, remains steady and low at 2.0 percent," reads the report issued by the National Bank of Kuwait (NBK).

The report added that food prices went up 5.7 percent y/y, lower than its 6.6 percent increase in July.

"Prices were up a small 0.3 percent m/m, though some components saw downside corrections after spiking in July (Ramadan). Vegetable prices fell 1.

6 percent m/m while meat prices declined 0.2 percent m/m." Meanwhile, the inflation in the housing services segment was steady at 1.5 percent y/y, where it has remained for the past 6 months.

"Prices for housing rent, which makes up almost the entire component, tend to be a bit sticky, having increased only 2 percent since January 2011 (while headline inflation has increased by 4.5 percent).

This has helped anchor overall inflation, as this component is the largest of the general index (27 percent weight), and tends to move at a slower pace, "Despite recent buoyant activity in the real estate sector, rental prices should keep their slower pace - as supply has so far kept up with demand in the market - thus providing a continued source of downward pressure for headline inflation." Elsewhere, the report noted that prices have also remained in check.

"The inflation rate remained below the 2 percent mark for household goods and services, as well as transport and communication. Prices for clothing and footwear rose 3.8 percent y/y; however the increase is still lower than the segment's recent averages."

It concluded that the inflation should remain modest in the near future, averaging about 3 percent for 2012. Some upside pressures could be realized in 2013, stemming from increased international food and commodity prices, as well as good steady demand for consumer products.


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