Inflation across the Gulf Co-operation Council remained subdued in June and July despite oil and gas price fluctuations linked to the ongoing US-Iran conflict, according to Kamco Invest.
In its latest report, the Kuwait-based investment firm said the geopolitical situation in the Middle East is expected to sustain upward pressure on global inflation in the short term, while intermittent hostilities between the US and Iran are poised to lift oil prices, dampen global economic growth and drive up interest rates.
The report’s assessment is broadly in line with projections from Oxford Economics in June, which forecast GCC inflation at 2.6 per cent in 2026, easing to 2.1pc in 2027 as temporary supply-side pressures dissipate.
“In the GCC, inflation remained subdued in June and July-2026, despite oil and gas price fluctuations prompted by the ongoing US-Iran conflict. In Saudi Arabia, annual inflation remained under the 2pc central bank benchmark, increasing by 1.8pc year on year in July,” said Kamco Invest.
Kuwait’s Consumer Price Index increased 2.2pc year on year in June, mainly supported by higher food and beverage prices.
Oman’s inflation rose 3.2pc year on year in July, the highest reading among GCC countries that month.
Food and non-alcoholic beverages and transportation were the main drivers.
Dubai’s consumer price index rose 5.3pc year on year in July, down from a 5.7pc peak in June.
Kamco attributed the increase to instability stemming from the US-Iran war, which resulted in higher fuel and imported food prices.
Bahrain’s inflation rate increased 2.3pc year on year in June, with the general CPI closing the month at 103.7 points.
The index rose 0.9pc month on month.
In the US, inflation increased 3.4pc year on year in July.
The Consumer Price Index for All Urban Consumers rose 0.1pc on a seasonally adjusted basis in July after a 0.4pc decline in June, according to the US Bureau of Labor Statistics.
Core CPI, excluding food and energy, increased 0.2pc in July.
Kamco said the CPI reading matched market forecasts, while the Federal Reserve’s preferred Personal Consumption Expenditures gauge came in slightly higher than anticipated.
In the eurozone, annual inflation reached 2.9pc in July, up from 2.8pc in June and in line with market expectations, according to Eurostat. Inflation in the wider EU rose to 3pc from 2.9pc.
Kamco said the Middle East conflict and higher energy costs remained key drivers of European inflation in July, given the EU’s status as a net energy importer.
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