‘Uplifting’ Gulf development model will return to US, Eric Trump predicts

RIYADH: Kuwait’s Consumer Price Index climbed 2.5 percent year on year in December, reaching 135.2, fueled by higher costs across miscellaneous goods and services, food and beverages, and clothing and footwear. 

The CPI showed relatively marginal growth monthly, recording a 0.45 percent increase compared to November, reflecting inflationary pressures across various sectors, according to the country’s Central Statistical Bureau. 

While the Gulf state’s annual inflation rate remains among the lowest globally, it outpaced several Gulf Cooperation Council countries, including Saudi Arabia, where the CPI rose by 1.9 percent year on year in December. 

This comes as Kuwait continues to recover in its non-oil sector, supported by easing inflation. Its non-oil exports rose to 23.2 million dinars ($74.9 million) in December, marking a 12.08 percent increase from November, according to data from the Ministry of Commerce and Industry. 

“This indicator is used as a measure of the changes in the purchasing power of the currency, to determine the interest rates and liquidity by the Central Bank of Kuwait, to support the adoption of appropriate economic decisions by the official bodies, and for the preparation of national accounts at constant prices,” the Central Statistical Bureau report said. 

The prices of miscellaneous goods and services rose by 5.43 percent year-on-year in December, while the food and beverages category saw a 5 percent annual increase. 

The cost of essential food items, including cereals, bread, meat, poultry, fish, and seafood, all experienced price hikes. Dairy products, oils, fats, and fresh produce also saw growth. Monthly inflation in this category was 0.39 percent compared to November. 

Housing services, which include rent and maintenance, increased by 0.90 percent annually and 0.41 percent monthly, reflecting higher housing costs across the country. 

Clothing and footwear prices witnessed a 5.13 percent annual increase and a 0.35 percent rise from November. 

The health sector recorded a 4 percent annual rise in costs, with outpatient and hospital services driving the increase. Monthly, this category saw a 0.73 percent rise. 

Transportation saw a 0.57 percent monthly increase, though its annual rate decreased by 1.47 percent, indicating a mixed trend in fuel and vehicle costs. 

While some sectors witnessed significant price hikes, others remained stable or saw minor changes. 

Cigarettes and tobacco prices remained stable monthly, increasing by a mere 0.07 percent annually. Communication costs also held steady, with an annual rise of just 0.88 percent. 

Education costs rose slightly by 0.71 percent year-on-year. Recreation and culture recorded a 2.64 percent annual increase, with a 0.53 percent rise compared to November. 

Restaurants and hotels saw a 2.03 percent annual increase, while miscellaneous goods and services took the lead among all non-food categories. 

In a recent report, the International Monetary Fund highlighted Kuwait’s recovery in the non-oil sector amid easing inflation, but noted a 1.5 percent gross domestic product contraction in the second quarter of 2024, driven by a 6.8 percent drop in the oil sector. 

The central bank held interest rates at 4 percent in September, citing the continued stability and strength of the country’s monetary and financial conditions. 

SINGAPORE: Oil prices fell on Monday as expectations of US President-elect Donald Trump relaxing curbs on Russia’s energy sector in exchange for a deal to end the Ukraine war offset concern of supply disruption from harsher sanctions.

Brent crude futures dropped 16 cents, or 0.2 percent, to $80.63 a barrel by 7:53 a.m. Saudi time after closing down 0.62 percent in the previous session.

The more active US West Texas Intermediate crude April contract fell 6 cents to $77.33 a barrel. The front-month contract, which expires on Tuesday, was at $78.03 a barrel, up 15 cents, or 0.19 percent, after settling down 1.02 percent on Friday.

Trump, who will be inaugurated later on Monday, is widely expected to make a flurry of policy announcements in the first hours of his second term, including an end to a moratorium on US liquefied natural gas export licenses — part of a wider strategy to strengthen the economy.

“There is a fair amount of uncertainty across markets coming into this week given the inauguration of President Trump and the raft of executive orders he reportedly is planning to sign,” ING analysts said in a note.

“This combined with it being a US holiday today, means that some market participants may have decided to take some risk off the table.”

Both contracts gained more than 1 percent last week in their fourth successive weekly ascent after the Biden administration sanctioned more than 100 tankers and two Russian oil producers. That led to a scramble by top buyers China and India for prompt oil cargo and a rush for ship supply as dealers of Russian and Iranian oil sought unsanctioned tankers to ferry their load.

While the new sanctions could impact the supply of nearly 1 million barrels per day of oil from Russia, recent price gains could be short lived depending on Trump action, ANZ analysts said in a client note.

Trump has promised to help end the Russia-Ukraine war quickly, which could involve relaxing some curbs to enable an accord, they said.

Analyst Tim Evans said the new sanctions are seen curtailing supply, at least in the near term.

“Higher tanker rates on unencumbered vessels and a widening backwardation in crude oil calendar spreads have been among the notable ripple effects, reinforcing the concern over supplies,” he said in his newsletter Evans on Energy.

Backwardation refers to prompt prices being higher than those in future months, indicating tight supply.

The prompt Brent monthly spread widened in backwardation by 5 cents to $1.27 a barrel on Monday. The WTI spread was at 63 cents a barrel, up 14 cents.

Easing tension in the Middle East also kept a lid on oil prices.

Hamas and Israel exchanged hostages and prisoners on Sunday that marked the first day of a ceasefire after 15 months of war.

Separately, investors are watching out for the impact from a cold snap in Texas and New Mexico which may affect US oil production, analysts at ANZ and ING said.