By Majd Othman
KUWAIT: Kuwait's annual inflation has edged up to 4.52 percent in May, recording an annual increase in the general measurement of consumer prices, said Central Statistical Bureau, Kuwait in its latest report. The report suggests that the spike in the inflation is a result of the increase in the prices of some major commodity groups, the movement of indices and a decrease in the prices of some other groups.
"The rise in oil prices is one of the direct reasons for the increase in prices globally as the rise in the costs of transportation and shipments of essential commodities added to the inflation pressure, said Maitham Al-Shakhs, an independent economic researcher.
According to Central Statistical Bureau, the monthly prices of the food and beverage group recorded an increase of 0.99 percent in May 2022 compared to the previous month as a result of the increase in the prices of cereals and bread group, meat and poultry group, fish and seafood group, dairy, cheese and eggs group, fresh, frozen and dried fruits group, fresh, frozen and dried vegetables, sugar and its products group, beverage group, while the prices of oils and fats groups and a group of other foodstuffs were stable.
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Annually, the prices of food and beverage group witnessed an increase of 8.23 percent in May 2022 compared to 2021 of the same month. Regarding the government intervention in checking the price spiral in the country, Al-Shakhs said, relying on the government for absolute support is wrong, at the same time the lack of government support is also wrong.
"Moderation in support is what is required at the moment. If the government wants to support measures to rein in inflation, it can do it through an increase in salaries or like what happened in previous years when there was a certain amount of financial support to ease the burden of cost of living," he said.
"However, a government intervention by handing out cash to citizens is something that will not check the inflation. It might mitigate the burden of some consumers by easing the prices, but it could fuel the prices of many commodities as a result of the lack of effective control by the Ministry of Commerce. The ministry becomes powerless to stop traders from artificially jacking up the prices as they could exploit the government subsidies. When the subsidy levels rise, the merchants will tend to exploit the situation and take benefits out of the situation," he pointed out.
"The real government support lies in investing in local and international factories to get the best prices for the essential food products such as investing in international farms to obtain wheat and rice at low prices. This must be the real support by the state in terms of food security," Al-Shakhs added.
"What we are missing significantly is the expansion of investment in external food security, as we are not an agricultural country. At the same time, there are opportunities for agricultural investment in many Arab countries and others, and the opportunities exist and they are real. But the question, for years, has been that why the government did not intervene in this aspect of support. Maybe because of some political reasons or other reasons," he quipped. "After the entry of the Kuwait Fund for Arab Economic Development into many countries, I think, it is a great opportunity for the government to invest in the food security sector in order to maintain price stability," she mentioned.
Supporting local manufacturing of products we import currently and working on reducing its prices as against the prices of imported products are among the other remedial solutions to rein in inflation. "We have many experiences with the farm produces made domestically. Unfortunately, Kuwaiti products could not face the stiff competition of imported products as their prices are less compared to the products manufactured locally. Ironically, consumers are concerned more about prices rather than quality," he pointed out.
"The Entrepreneurs Fund and the Public Authority for Industry have a great job to do under the current circumstances. They need to extend real support to make national products available in the markets. This, in my view, will save the state a lot of money from extending direct support, be it in the form of salaries or other means," he said.
The report of the Central Statistical Bureau mentioned that the prices have witnessed an annual increase in the education group of 18.95 percent, the clothing and footwear group by 6.37 percent, housing services 2.26 percent, home furnishings 2.27 percent, the recreational and cultural group 3.88 percent, restaurants and hotels by 2.77 percent, and the miscellaneous goods and services group 3.21 percent.