High prices leave Kuwaiti families reeling

Kuwait families are suffering major budget crunches as inflation in the oil rich state climbs to new highs.

Prices for basic goods have surged by as much as 40% over the past three months, according to the Kuwait Times, with inflation knocking a new record of 7.3% in October, 2007.

The record figure comes despite the Government depegging its dinar from the flailing US dollar in May of last year, a move many thought would quell the rising cost of living.

Expatriate workers in Kuwait's private sector are the most exposed to escalating prices for basic food and commodities, the paper said, as they are not covered by any form of Government protection.

"The cost of absolutely everything in Kuwait has gone up," a Sri Lankan nurse who works at the Ministry of Health told the Kuwait Times.

"We have cut down on the use of milk, meat and eggs from our daily diet as these things are just too expensive now," she said.

The cost of basmati rice, a staple for hundreds of thousands of expat workers in Kuwait, has leapt 50% while edible oil has more than doubled, the paper said.

Although some understand that agflation - a term given to agricultural inflation - contributes largely to the rising in food prices, many have turned once again to their Government to offer protection either in the form of pay raises or subsidies.

Authorities have proposed a pay hike for public sector employees to come into effect on February 25, but many Kuwaitis say local supermarkets have been jacking up prices to take advantage of the expected salary bump.

Others blame the rising prices on multinational food distributors overpowering local co-operatives. They argue that small co-operatives have been unable to hold their desired price-line as private retail outlets muscle into the market.

"It is not justifiable at all," one Kuwaiti man told the daily, referring to exorbitant price rises. "Kuwait is an oil producing country, not a consumer country. The Government has to act firmly to regulate market forces."

The last such market-controlling action taken by the Kuwait government, a range of subsidies implemented in December and a ration card system to control prices, has done little to curb the runaway cost of living.

Many analysts argue that, although currency pegging may exacerbate regional inflation, factors such as a shortage in affordable housing and the rising price of global agricultural commodities are the main factors driving prices up. ArabianBusiness.com