MENA | The GCC’s inflation risk is low, despite surging food costs

Gulf Cooperation Council (GCC) economies have seen some of the largest food price increases among emerging markets over the past year. But it isn’t a repeat of 2007-2008 or even 2011-2012. Restrained public spending and weak demand signal limited inflation risk.

What you will learn:

  • After its temporary VAT-hike-induced surge, inflation there will slow to below 2% in H2.
  • A weak outlook for domestic currencies, which are pegged to the US dollar, will continue to stoke inflationary pressures stemming from climbing global food and shipping costs. Transport price inflation is also set to edge up.
  • However, disinflationary forces will endure in the near term, even as downward pressure from housing (the largest component in local CPI baskets) gradually unwinds.

Topics: Economic development, Inflation, Dollar, Macro, Price Inflation, MENA, GCC

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