GCC inflation rate increases 1.5 percent in September on rising housing prices

According to consumer price data released by the Gulf Cooperation Council (GCC) Statistical Centre, the overall inflation rate in the Gulf region rose by 1.5% year-on-year by the end of September 2024. Previously, the center had predicted that the inflation rate in Gulf countries would stabilize at 2.4%, 2.6%, and 2.1% between 2024 and 2026.

In 2023, the consumer price inflation rate in GCC countries was approximately 2.2%, lower than the 3.1% in 2022. The continued decline in inflation in the region is attributed to factors including improved supply chains, falling crude oil prices, declining global food prices, and the appreciation of the US dollar against major currencies, as Gulf countries' currencies are pegged to the dollar.

Among the GCC member states, Kuwait had the highest annual inflation rate in September at 2.8%, followed by Saudi Arabia (1.7%), Qatar (0.8%), and Bahrain and Oman (both at 0.4%).

The GCC Statistical Centre attributed the rise in inflation to an increase in housing prices, which rose sharply by 5.7%. In addition, prices in the culture and entertainment category rose by 2.6%, followed by goods and services (1.8%), restaurants and hotels (1.5%), and food and beverages and education (both at 1.0%).

Conversely, prices in the transportation category fell by 3%, furniture and household equipment by 2.3%, tobacco by 1.2%, communications by 0.9%, and clothing and footwear by 0.8%, while healthcare prices remained unchanged.

The monetary policy of the United States is also playing a key role in curbing inflation in the region, as the central banks of the GCC tend to follow the interest rate policies of the Federal Reserve, aiming to bring inflation down to the target of 2%.

The global economy is improving, with economic growth remaining resilient and inflation continuing to decline. The OECD outlook forecasts that global economic growth will remain at 3.2% in 2024 and 2025, compared to 3.1% in 2023, due to strong trade growth, higher real incomes, and looser monetary policy in many economies.

In the Gulf region, the GCC Statistical Centre expects an economic growth rate of 3.7% in 2024. Economic growth is projected to continue to accelerate in 2025, reaching 4.5%, before stabilizing at 3.5% in 2026.

Global inflation is likely to fall back to the central bank targets of most G20 economies by the end of 2025. Overall inflation in G20 economies is expected to fall from 6.1% in 2023 to 5.4% in 2024 and 3.3% in 2025, while core inflation in G20 advanced economies is expected to fall from 2.7% in 2024 to 2.1% in 2025.