Thursday, 21 May 2026
Inflationary pressures across the Gulf region have intensified following the escalation of conflict in the Middle East, according to a new report released by Kamco Invest. The report said disruptions to global energy and commodity markets have contributed to a renewed rise in inflation expectations worldwide, reversing part of the disinflation trend seen over the past two years.
According to the report, the International Monetary Fund has raised its forecast for global inflation to 4.4 percent in 2026, before moderating to 3.7 percent in 2027. In a more adverse scenario, where oil prices remain close to $110 per barrel due to prolonged supply disruptions, global inflation could rise to 5.4 percent in 2026 and exceed 6 percent in 2027.
The report noted that energy supply disruptions linked to the closure of the Strait of Hormuz and the wider regional conflict have pushed up fuel and food prices globally. In the United States, inflation accelerated to 3.8 percent in April 2026 from 3.3 percent a month earlier, marking the highest level since May 2023. Eurozone inflation also increased to 3 percent in April, driven primarily by higher energy costs.
Kamco Invest said Gulf economies have so far experienced more moderate inflationary effects than several other emerging markets, although risks remain elevated due to the region’s dependence on imported food and desalinated water supplies. The report added that prolonged disruptions could place additional pressure on food inventories and increase import costs across the region.
The report highlighted that Gulf central banks have broadly maintained interest rates in line with the Federal Reserve System, which kept rates unchanged in April 2026 amid renewed inflation concerns. At the same time, inflation trends within GCC countries have remained mixed.
In Kuwait, inflation rose 2.6 percent year-on-year in April 2026, driven mainly by a 6.3 percent increase in food and beverage prices. Transport prices rose 4.5 percent during the month, while housing services increased at a slower pace of 0.5 percent annually.
Saudi Arabia maintained one of the lowest inflation rates in the region, with consumer prices rising 1.7 percent year-on-year in April 2026. Housing, utilities and fuel costs increased 3.8 percent, supported by higher residential rents, while transport prices rose 1 percent. Food and beverage prices increased 0.6 percent annually.
In the United Arab Emirates, inflation remained relatively stable despite higher fuel prices. Dubai’s annual inflation rate stood at 3 percent in December 2025, while the UAE-wide inflation rate averaged 1.3 percent during 2025, supported by declines in transport and clothing prices that offset increases in housing and financial services costs.
Qatar recorded annual inflation of 2.6 percent in April 2026, led by increases in food and beverage prices, which rose 10.4 percent year-on-year. Bahrain reported one of the region’s lowest inflation levels at 1.1 percent in March 2026, while Oman registered the highest inflation rate among GCC countries at 3.2 percent in April 2026, driven largely by higher food prices, including a 25 percent rise in vegetable prices.
Kamco Invest also noted that global food prices continued to rise moderately in April 2026. The Food and Agriculture Organization food price index increased 2 percent year-on-year, supported by higher prices for meat, vegetable oils and grains. Vegetable oil prices reached their highest level since July 2022 due to stronger demand linked to biofuel production and higher crude oil prices.
