Over the past five years, the cost of living in Kuwait has climbed steadily, mirroring a global trend of rising prices across nearly all goods and services. Despite the absence of taxes on individuals or businesses and the continued provision of state subsidies for food, housing, health, and education, Kuwaiti consumers and residents are increasingly feeling the strain of inflation.

Globally, few countries have escaped this wave of rising prices — from wealthy nations like the United States and those in the European Union to developing economies in Asia and Africa. The lingering effects of the COVID-19 pandemic, disrupted supply chains, and ongoing geopolitical tensions have together fueled persistent price increases.

Imported Inflation Dominates

In Kuwait’s case, inflation is largely imported. With more than 95% of basic commodities brought in from abroad, fluctuations in international prices are quickly transmitted to the local market. Official data confirms consistent annual increases in the Consumer Price Index (CPI), with food prices leading the surge.

This dependency makes Kuwait’s economy highly sensitive to global dynamics, particularly in the energy sector. The rise in international oil prices increases the cost of maritime shipping — the primary means of transporting imports — thereby pushing up consumer prices at home. In July 2025, energy prices alone contributed 2.39% to monthly inflation.

Although Kuwait is a major oil exporter, it remains vulnerable to global energy market volatility. Because energy and oil prices are determined globally, they are classified as external inflationary factors beyond Kuwait’s direct control.

Sectors Most Affected

The sectors that experienced the steepest price hikes include:

• Food and beverages: The leading driver of inflation, with prices rising more than 5% in most months.
• Clothing and footwear: Recorded increases between 4% and 5%.
• Health and education: Moderate yet persistent price rises.
• Transportation: In contrast to other Gulf states, this sector occasionally saw price declines, mitigating some inflationary impact.

Global and Local Dynamics

Kuwait’s inflation reflects the interplay between global pressures and domestic factors. The partial peg of the Kuwaiti dinar to the US dollar makes the country susceptible to dollar fluctuations. As energy prices rise globally, demand for the dollar increases, further elevating import costs.

Domestically, rising production costs—such as wages, electricity, and transport—contribute to inflation. The shift in consumer demand toward imported goods, luxury services, and international travel has also added pressure to prices, though these lifestyle factors are secondary compared to external influences.

Moderate Yet Persistent Inflation

While inflation in Kuwait is moderate relative to global levels, its impact is pronounced in daily life. Official data from 2025 highlights steady price increases:

• March 2025: CPI up 2.41% year-on-year
• February 2025: CPI up 2.49%, with food prices up 5.23%
• June 2025: CPI up 2.32%, with food prices up 5.11%
• July 2025: CPI up 2.39%, with food prices up 5.63%

According to the Gulf Statistical Center (GCC-Stat), inflation across Gulf countries averaged 1.7% in October 2024, but Kuwait topped the list with 2.4%.

A Call for Structural Reform

Although Kuwait’s inflation levels are moderate compared to global standards, the cumulative effect on households is significant. Economists emphasize the importance of:

• Diversifying domestic production to reduce import dependence.
• Strengthening supply chains to ensure stability during global disruptions.
• Encouraging local competition to drive efficiency and lower operating costs.

Inflation in Kuwait, therefore, is not merely a reflection of global trends — it is a reminder of the vulnerabilities of an import-dependent economy. Addressing it requires a long-term vision focused on economic diversification, local industry development, and sustainable consumption patterns.