Local Inflation Jumps 8.2% Over The Last Five Years; Wages Don't Keep Pace

With inflation in Kuwait on the rise since 2017, and particularly in the last two years, the subject of whether compensation increases have kept pace with inflation is one worth considering.

Consumer prices increased by 8.2 % between September 2017 and September 2021, or from 112.8 to 122.1 points, according to information released by the Central Administration of Statistics, with a rise of more than 10% between September 2017 and last February.

Inflation grew by 0.27 % on an annual basis from September 2017 to September 2018 (from 112.8 to 113.1 points), sending the consumer price index up by 1.68 %  to 115 points the following year.

Inflation began to accelerate in 2020, coinciding with the Corona crisis, a major disruption in global supply chains, and an increase in food prices, with the consumer price index rising to 117.3 points, or about 2%, in September of that year, compared to the same month in 2019, before doubling to about 4.09 % in September 2021, when it jumped to 122.1 points.

Although the world economy began to recover from the effects of "Corona" in 2022, the Russian invasion of Ukraine had a significant impact, as it resulted in unprecedented increases in energy prices, and the war's repercussions pushed the price index of basic food commodities in the world to record highs. According to the UN's Food and Agriculture Organization (FAO), inflation in Kuwait reached its highest level in ten years in February, at 4.37 % on an annual basis, with food and education being the most affected.

While inflation affects real earnings by diminishing the buying power of money, pay increases mitigate the impact of income inflation if they do not prevent a drop in the standard of living, particularly for Kuwait's middle and low-income population.

According to labour market data recently released by the Central Administration of Statistics, average Kuwaiti salaries increased by 6.04 %  between 2017 and 2021, while expatriate salaries increased at a faster rate of 13.7 %, indicating that Kuwaiti salaries outnumber expatriate incomes in terms of value.

According to the statistics, the average income of a Kuwaiti employee scaled by 85 dinars over five years, reaching 1490 dinars in September 2021, up from 1405 dinars at the same time in 2017.

The average expatriate wage has increased by 13.7 % in the previous five years, reaching 40 dinars. At the end of September 2021, the average expatriate wage in Kuwait was 331 dinars, up from 291 dinars during the same period in 2017.

While income increases may not have kept pace with inflation over the last five years, pensioners will bear the brunt of the increase in commodity costs.

The World Bank predicted that inflation in Kuwait will grow from 3.4 %  in 2021 to 3.6% in 2022, making Kuwait the second Gulf country to have its inflation rate rise after Qatar, which is forecast to hit 4%.

It should be mentioned that, according to World Bank estimations, Kuwait had the highest inflation rate in the Gulf area in 2021, followed by Saudi Arabia and Oman.

According to the latest "Statistics" estimates, the first group "food and drinks" saw the greatest increase in inflation, with prices rising by 7.3 % in February compared to the same time in 2021, and accounting for 17 %  of Kuwait's total imports.

Education saw the second-largest increase in inflation, at 18.95% followed by "clothing" at 5.54 % last February on an annual basis, then "entertainment and culture" at 3.91 %, and "miscellaneous goods and services" at 3.61% .

Comments Post Comment

Leave a Comment

Submit