A Since we restored the old regime, a basket of trade-related currencies, the Kuwaiti dinar has appreciated by almost 9% against the dollar, strengthening the dinar, and so far in our opinion it is excellent. With 80% of our goods and services imported and our exchange rate appreciating against the dollar, the depegging has played a positive role as regards imports and has played a part in reducing inflation, especially from the high price of imports.
Inflation has gone up. This is no surprise because of the rising cost of food in Kuwait and elsewhere as a result of increased demand and decreased supply of agricultural products through drought and biofuels, and also the increased price of oil, transportation and insurance. Inflation was 3.1% in 2006 and rose to an official rate of 5.5% in 2007 as population increases created more pressure on housing, with rental prices rising 6% and food prices rising, especially given that 85% of food is imported. In January 2008, inflation rose to 9.5%.
