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Bahrain deflation eases to 1.7pc in May

Manama, June 20, 2011

Deflation in Bahrain eased to 1.7 percent year-on-year in May and prices remained unchanged from the previous month as a decline in food costs offset a jump in transport prices, data showed on Monday.

Consumer prices in the small non-Opec oil exporter have been falling since March as the worst public unrest since the 1990s hit tourism and domestic demand.

In April, prices in Bahrain fell by 2.3 percent year-on-year and rose by 0.4 percent on the month, data from the Central Informatics Organisation showed.

The kingdom last saw such a deflation in 1986, when prices dropped 2.5 percent for the full year on average, according to the International Monetary Fund.   

Food prices, which make up 16 percent of the basket, plunged by 2.6 percent month-on-month in May, the largest drop in six months, compared to a 1.4 percent rise in April. 

"Food prices in the region seem to correlate with what is happening on the global level. Food price inflation has somewhat decelerated surprisingly over the last few months," said Daniel Kaye, senior economist at the National Bank of Kuwait.

Housing costs, the largest consumer expense at 24 percent of the basket, remained flat in May, for the second month in a row. Transport prices jumped by 4.1 percent on a monthly basis in May, after a 0.4 percent decrease in April, the data showed.   

Analysts have said deflation is linked to the recent political unrest in Bahrain. Analysts polled by Reuters in March expect Bahrain to have average inflation of 3.0 percent in 2011 after 2.0 percent last year. - Reuters




Tags: Bahrain | inflation | prices | Deflation |

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