Kuwait Investment Company (KIC): Gulf inflation rates were moderate in June despite oil price fluctuations
- 5.6% domestic increase in food and beverages
- 1.8% general inflation rate in Saudi Arabia for the first seven months
- 5.3% annual growth in Dubai’s consumer index
- 12.7% rise in food and beverages in Qatar
- 3.2% increase in consumer prices in Oman
A report by Kamco Invest expects that the ongoing conflict in the Middle East will keep global inflationary pressures at elevated levels, with a possibility of further escalation in the short term. It anticipates that intermittent renewals of confrontations between the United States and Iran will sustain high oil prices, weaken the momentum of global economic growth, and intensify pressures toward interest rate hikes.
The war in the Middle East has already disrupted 30% of global annual fertilizer shipments passing through the Strait of Hormuz, contributing to higher global food prices.
While the report expects policies aimed at containing the accelerating rise in inflation rates to lead to interest rate hikes—which may in turn slow economic activity—Gulf countries recorded moderate inflation rates during June and July 2026, despite fluctuations in oil and gas prices.
The report pointed to the latest reading of Kuwait’s Consumer Price Index for June, which rose 2.2% year-on-year, while the index remained unchanged month-on-month during the same period.
The increase was primarily driven by a 5.6% rise in the food and beverages index, which is the second-largest sub-index by weight. The services and miscellaneous goods index recorded the highest annual growth rate in June, rising 5.8%, while the housing services index, which carries the largest weight among index components, increased by 0.2% year-on-year during the month. Furthermore, 13 out of 14 sectoral indices recorded growth during the same period. Transport prices rose by 4.8%, while clothing and footwear prices increased by 0.9%. On a monthly basis, food and beverage prices rose by 0.2% compared to the previous month, primarily driven by increases in grain and bread and meat and poultry groups. In contrast, cigarette and tobacco prices remained stable during the month. Housing service prices also rose by 0.1%, due to increases in maintenance and repair service costs.
The report noted that the general inflation rate in Saudi Arabia remained stable during the first seven months of 2026, averaging 1.8%, which is below the 2% threshold. The Consumer Price Index recorded a 1.8% annual increase in July compared to July 2025. This moderate growth was primarily driven by rising prices in the housing, water, electricity, gas, and other fuels group, with actual housing rents increasing by 4.2% year-on-year.
Dubai’s Consumer Price Index recorded a 5.3% annual growth in July 2026, compared to a peak growth of 5.7% in June 2026, influenced by disruptions caused by the US-Iran war, which led to higher fuel and imported food prices. The index’s growth is attributed to price increases in specific sub-sectors, including the transport sector, which rose by 11.9% year-on-year, primarily driven by a 41.4% increase in passenger air transport costs.
The report highlighted that Qatar’s inflation rate rose by 2.2% year-on-year in June 2026, while recording a marginal monthly increase of 0.1% compared to May 2026. On a year-on-year basis, the data showed price increases in seven major groups, led by the food and beverages group, which recorded a 12.7% rise, followed by the clothing and footwear group, which increased by 5% in June 2026.
It noted that Bahrain’s inflation rate reached 2.3% in June 2026, with the general consumer price index closing the month at 103.7 points. On a monthly basis, the index recorded a marginal increase of 0.9% during the month.
It mentioned that Oman’s consumer price index rose by 3.2% year-on-year in July 2026, registering the highest growth rate among Gulf countries during the month. The increase was primarily driven by notable rises in several high-weight groups, notably the non-alcoholic food and beverages group (+7.3% year-on-year) and the transport group (+6.5%).
On a monthly basis, Oman’s consumer price index recorded a marginal increase of 0.7%, primarily driven by a 1.7% monthly rise in the non-alcoholic food and beverages group, alongside a 2.2% increase in the transport group during the same period.
