Dubai: Kuwait's annual inflation edged up to a four-month high of 4.1 per cent in March as food costs surged in their fastest monthly pace in more than a year, data showed yesterday, fuelled by more expensive food globally and domestic strikes.

The oil exporter had seen inflation easing from May's peak of 5.4 per cent in 2011 but consumer price growth picked up speed again in January.

Prices in the Opec member's $171 billion (Dh628 billion) economy grew 0.8 per cent month-on-month in March, a six-month high, up from a 0.2 per cent rise in February, data from the Central Statistics Office showed.

"We had expected to see a rise in prices, partly related to global food price increases, but mostly as a result of domestic strikes including of customs workers," said Monica Malek, chief economist at EFG-Hermes in Dubai. "These strikes pushed up prices of imported goods, including food."

Around 3,000 Kuwaiti customs workers went on a week-long strike in March, which disrupted traffic at ports, demanding higher salary increases despite the government plan for a 25 per cent rise in public wages. Employees at national carrier Kuwait Airways grounded aircraft for three days during a walkout.

Food costs, which account for almost one fifth of Kuwait consumer expenses, soared by 2.6 per cent month-on-month in March, their quickest advance in 15 months, up from a mere 0.1 per cent increase in February.

Housing and transport prices, which together make up 43 per cent of the basket, remained flat, the data also showed.

Global food prices

"At the moment, the rise is clearly being driven by higher global food prices, which have really started to recover after coming down over 2011," said Liz Martins, senior Mena economist at HSBC in Dubai.

"Domestic inflation drivers are not yet in evidence, but the recent wage rises and expansionary government spending could start to feed through to stronger demand side price pressures later in the year," she said.

EFG's Malek expected inflation to fall in the following months as government wage increases helped to end the strikes. Giyas Gokkent, chief economist at National Bank of Abu Dhabi sees inflation hovering around four per cent in the near term.

Analysts polled by Reuters in March expected average inflation in Kuwait to slow to 4.5 per cent in 2012 from a three-year high of 4.8 per cent last year given a weaker global economic environment.

Kuwait abandoned its direct peg to the US dollar in 2007 to rein in runaway inflation. It links its dinar to an undisclosed basket of currencies, which is believed to be heavily dollar dominated.