Inflation in the Gulf was expected to creep higher this year on robust global commodity prices, a weak dollar and increased government spending.

However, slow lending growth and ongoing weakness in the property sector in some of the countries are seen keeping consumer price growth well below record, double-digit peaks seen in most Gulf states in 2008, despite oil prices staying above $90 per barrel now.

In Kuwait, inflation has been hovering above five percent since the beginning of this year.

It stood at 5.3 percent in April, after climbing to a nearly two-year peak of six percent in December.

On the month, consumer prices in Kuwait, grew 0.3 percent in May, up from a 0.2 percent rise in the previous month, as food costs rose sharply for the third month in a row, statistics office’s data cited by the state news agency KUNA showed.

“As long as food prices don’t go up too much further than the international level, then I suspect we might be quite near a short term peak for year-on-year inflation, and it could ease back in coming months toward 5 percent,” said Daniel Kaye, senior economist at the National Bank of Kuwait.

“Inflation remains not perhaps a burning issue for the (monetary) policy authority in the region yet,” he said.

Kuwait’s central bank governor was quoted as saying interest rates were at a suitable level, and a dinar peg to a basket of currencies was helping to curb inflation, mostly driven by rising import costs.

The May inflation figure comes within the Kuwait central bank’s 5-6 percent forecast from March.

Central banks in the Gulf, which needs to import most of its food needs, have limited tools to combat price pressures as most of the region’s currencies are linked to the greenback.

In Qatar, whose economy is powering ahead at a double-digit clip, inflation was also slightly higher in May, at 1.7 percent year on year and 0.2 percent on the month, compared with April.

“These numbers are very benign and point to a stabilization of inflation,” said Fabio Scacciavillani, chief economist at Oman Investment Fund.

“I do not see anything changing the outlook between now and the end of the year, unless anything unexpected happens linked to a sovereign default in Europe or stalemate on US debt ceiling discussions,” he said.

A Reuters poll this month showed analysts expected average price growth at 5.1 percent in Kuwait and 3.2 percent in Qatar this year.