Kuwait’s Consumer Price Index (CPI) grew by 2.5 percent year-on-year in December 2024, reaching 135.2, according to data from the country’s Central Statistical Bureau.
The increase was largely fuelled by higher costs across various sectors, including miscellaneous goods and services, food and beverages, and clothing and footwear.
The CPI recorded a modest 0.45% increase on a monthly basis compared to November, which indicates the relentless inflationary pressures across various sectors.
Kuwait’s inflation rate is among the lowest when the metrics are stretched across the globe, but it is on the high side when compared to its neighbours in the Gulf Cooperation Council (GCC).
For example, Saudi Arabia’s CPI rose by 1.9% year on year in December.
The recent development highlights the topsy-turvy economic trend within the GCC, particularly as Kuwait’s non-oil sector continues to recover from previous setbacks.
With inflation rates dipping, Kuwait’s non-oil exports climbed to $74.9 million in December. According to data from the Ministry of Commerce and Industry, that accounts for a 12.08% increase from November.
Breakdown of Inflation Rates Across Various Sectors
The CPI data from December revealed key changes in the inflation rate across various sectors.
Prices for miscellaneous goods and services surged by 5.43% year-on-year, while the food and beverages sector increased by 5% annually.
Essential food items such as cereals, bread, meat, poultry, fish, and seafood were affected. There was also a hike in prices of dairy products, oils, fats and fresh produce.
Monthly inflation in this category was pegged at 0.39% compared to November.
Housing services, including rent and maintenance costs, rose by 0.90% annually and 0.41% monthly, reflecting the challenges faced by the country’s housing market.
Meanwhile, clothing and footwear prices recorded a 5.13% annual increase and a 0.35% monthly rise.
Other sectors affected by inflation include health, which recorded a 4% annual rise – fuelled by outpatient and hospital services. This sector increased by 0.73% on a monthly basis.
Transportation was also affected, witnessing a 0.57% monthly increase despite an annual decline of 1.47%. Unstable prices in fuel and vehicles are key reasons for the mixed trend.
Recreation and culture costs increased by 2.64% year-on-year, while restaurants and hotels grew by 2.03% annually.
It wasn’t all doom and gloom. Some categories managed to maintain some semblance of stability, while others took a minor hit.
Cigarette and tobacco prices remained stable monthly, increasing by 0.07% annually. Communication costs also held steady, with an annual rise of just 0.88%. Education costs rose slightly by 0.71% year-on-year.
iGaming Could be a Solution to Kuwait’s Inflation Dilemma
Kuwait is among a host of Middle Eastern nations keen to diversify their revenue and reduce their overdependence on the oil and gas sector.
However, with the country currently struggling to curb the inflation rate across the board, they need to consider other potentially unorthodox means of generating the revenue needed to provide stability. That’s where the iGaming sector comes in.
Gambling is currently prohibited under Kuwaiti law, but the nation may need to reconsider their stance if they are serious about boosting the nation’s economy.
The global gambling industry is a multi-billion-dollar sector, contributing substantially to the gross domestic product (GDP) of countries that have embraced it.
It has been a game changer, particularly for countries in the Middle East such as the United Arab Emirates (UAE). The UAE have legalised gambling but within a heavily regulated environment.
Their project with Wynn Resorts is poised to attract international tourists, generate revenue and create thousands of jobs for the locals, all of which significantly contribute to the nation’s economy.
Kuwait can follow their blueprint. If they adopt a similar approach, it could unlock a new revenue stream while reducing the nation’s reliance on oil exports.
There are numerous online casinos in Kuwait, but they are regulated by authorities located in established iGaming jurisdictions elsewhere in the world.
By embracing gambling, the government would garner taxation revenues while creating jobs across various sectors, including hospitality, construction and retail.
It would not only transform the economy but also make sure citizens don’t fall prey to unregulated gambling platforms.
Kuwait’s Non-Oil Sector Showing Promising Signs
Kuwait’s non-oil sector has shown promising signs of recovery, bolstered by increased exports and easing inflation.
The International Monetary Fund (IMF) recently highlighted these positive developments but noted a 1.5% contraction in Kuwait’s GDP during the second quarter of 2024.
The decline was driven by a 6.8% drop in the oil sector, which highlights just how vulnerable the country could be if they don’t shift their focus to other methods of generating revenue such as iGaming.
Efforts to diversify the economy have been a central focus of Kuwait’s Vision 2035 plan, which aims to reduce dependence on hydrocarbons and develop sustainable industries.
However, progress has been uneven, with structural reforms and foreign investment initiatives stalling.