Kuwait Inflation to Slow to 7% by Year-End, National Bank Says

By Matthew Brown

Nov. 9 (Bloomberg) -- Kuwaiti inflation will slow to between 7 percent and 8 percent by year-end from 11.1 percent in July, as rent and food prices ease, National Bank of Kuwait said.

Annual inflation will slow to between 5 percent and 6 percent, the country's largest commercial bank by market value said in an e-mailed report late yesterday. Inflation is more likely to be lower than forecast because spending and economic growth may be impacted by the global financial crisis, it said.

``The Central Bank of Kuwait should be mildly relieved as these relatively reassuring numbers take the urgency out of tackling inflation at a time the central bank, and most others worldwide, have switched their attention to fighting financial market turmoil and to restoring confidence,'' the report said.

Kuwait's central bank has taken a number of measures to strengthen the local banking system and maintain lending in recent months, including guaranteeing deposits, raising the loan-to-deposit ratio and injecting funds into the interbank market.

The central bank was previously focused on slowing money supply growth, and took measures to discourage local banks from lending dinars to foreign institutions for speculation on the value of the Kuwaiti currency.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net