Inflation in Kuwait, the only Gulf oil producer without a dollar-pegged currency, remained around a record 10 percent in March, while United Arab Emirates money supply, an indicator of future inflation, surged at the fastest pace in five years.
Price rises are soaring across the world’s biggest oil-exporting region, touching a more than 30-year peak in top oil exporter Saudi Arabia, at least a 20-year high in the UAE and record and near-record levels in Oman and Qatar.
“The new record figures come on top of an already elevated base in 2007, which is very worrying,” said Ala’a Al-Yousuf, chief economist at Gulf Finance House.
Inflation in Oman soared to a record 12.4 percent in April and United Arab Emirates inflation touched 11.1 percent last year, data showed this week. “The social impact is going to be the biggest worry given the inflexibility of wage-setting in the region,” Yousuf said.
Almost two-thirds of employees in the Middle East think their salaries are not rising fast enough to keep up pace with inflation, a survey by Middle East employment portal Bayt.com showed this week.
In the UAE, where some federal government employees got 70 percent wage hikes this year, 61 percent of respondents in the survey were dissatisfied with their wages.
Like some of its neighbours, the UAE, a Gulf trade hub, relies on low-wage Asian labourers to support its oil-fuelled development. But foreign workers are increasingly disgruntled by salaries pegged to the ailing dollar and the rate of inflation.
Money supply in the UAE, the second-largest Arab economy and world’s fifth-largest oil exporter, jumped almost 40 percent in the year to March, central bank data showed on Thursday, signalling inflation will continue to rise.
But further salary increases only threaten to fuel money supply growth already ballooning across Gulf Arab economies, which are surging on a near seven-fold rise in oil prices since 2002.
